DevelopmentThe International

Experience

Key Issues1. WHY DOES DEVELOPMENT VARY AMONG COUNTRIES?

– Economic indicators of development; social indicators of development; demographic indicators of development.

2. WHERE ARE MORE AND LESS DEVELOPED COUNTRIES DISTRIBUTED?

– More developed regions; less developed regions.3. WHERE DOES LEVEL OF DEVELOPMENT VARY BY

GENDER?– Gender-related development index,; gender empowerment.

4. WHY DO LESS DEVELOPED COUNTRIES FACE OBSTACLES TO DEVELOPMENT?

– Development through self-sufficiency; development through international trade; financing development.

Five Economic Indicators of Development

• Gross domestic product, • Economic structure, • Worker productivity, • Access to raw materials, and • Availability of consumer goods.

Indicators of Development• Economic indicators of development

– Gross domestic product per capita– Types of jobs– Raw materials– Consumer goods

• Social indicators of development– Education and literacy– Health and welfare

• Demographic indicators of development– Life expectancy – Infant mortality

rate– Natural increase rate – Crude birth rate

Human Development Index, 2005

Developed by the United Nations, the HDI combines several measures of development: life expectancy at birth, adjusted GDP per capita, and knowledge (schooling and literacy).

Human Development Index (HDI) and Recent Colonial Control

The “HDI” ranks the relative “development” of the world’s countries based on three indicators: longevity, as measured by life expectancy at birth; educational attainment, measured by a combination of adult literacy rate (two thirds weight) and combined gross primary, secondary and tertiary enrollment in schools (one third weight); and standard of living, as measured by

GDP per capita – PPP (purchasing power parity) US$.

Norway’s HDI rank is 1; Canada- 4; United States- 8; Japan- 9; Chile- 43; China- 94; Sierra Leone- 177.

A Key Factor in Productivity

• People in more developed countries are wealthier because they are freed from the need to produce their own food.

• Instead, they can work in more productive industries.

• By being more productive, wealth is generated to obtain needed raw materials; these raw materials in turn stimulate higher productivity.

• Some of the wealth also goes to purchasing consumer goods, thus stimulating further production.

Demographics and Development

• The key demographic indicators of development are – life expectancy, – infant mortality rate, – natural increase rate, and – crude birth rate.

Annual GDP Per Capita

Annual gross domestic product (GDP) per capita averages over $20,000 in most developed countries but under $5000 in most less developed countries.

Economic Sectors

1. Primary - such as hunting and gathering, along with farming

2. Secondary - manufacturing industries3. Tertiary - service industries like offices,

banks, and hospitals4. Quartenary - specialized service

industries/management5. Quinary – creative, innovative societal

developments

Percentage employment in the primary, secondary, and tertiary sectors of MDCs has changed dramatically, but change has been slower in LDCs.

Manufacturing Value Added Per Manufacturing Worker

Land-Based Telephone Lines Per Capita

Cellular Telephones Per Capita

Percent Enrolled in School

Percent of Adults Who Are Literate

Percent of Population That is Undernourished

Calorie Supply Per Capita

Physicians per 100,000 PopulationPrivate Expenditures on Health Care as

Percent of GDP

More and Less Developed Regions

• More developed regions– Anglo-America – Western Europe– Eastern Europe – Japan– South Pacific

• Less developed regions– Latin America – East Asia– Southeast Asia – Middle East– South Asia – Sub-Saharan

Africa

More & Less Developed Regions

The less developed regions include Latin America, Sub-Saharan Africa, Middle East, South Asia, East Asia, and Southeast Asia.

Development and Gender

• Gender-related development index– Economic indicator of gender differences– Social indicators of gender differences– Demographic indicator of gender differences

• Gender empowerment– Economic indicators of empowerment– Political indicators of empowerment

Gender-Related Development Index (GDI)

GDI combines income, literacy, education and life expectancy adjusted to reflect differences in the accomplishments of men and women.

Female College Attendance as Percentage of Male College Attendance

Female Literacy Rate as Percentage of Male Literacy Rate

Female Income as Percentage of Male Income

Percent Seats in National Legislature Held by Women

Development Strategies• Development through self-sufficiency

– Elements of self-sufficiency approach– Problems with self-sufficiency

• Development through international trade– Rostow’s development model– Examples of international trade approach– Problems with international trade

• Financing development

How Can LDCs Promote Development?

1. LDCs need to increase GDP/capita and improve social & economic conditions of people

2. Two fundamental questions in trying to encourage development:

a). What are best policies to produce development?b). How can development be financed?

3. Two ways to do this:a). International tradeb). Self-sufficiency

International trade• Countries identify its unique economic assets and

determine what others are willing to buy• Countries must identify what it can manufacture

and distribute at a higher quality and cheaper cost than another country

• If countries go through the Rostow stages, then the economic “trickle down” effect aids others in the country

• Countries that have taken the International Trade approach include:– Saudi Arabia, Kuwait, Bahrain, Oman, – all petroleum

exporting countries– These countries have Western consumer goods, but

culture changes more slowly (e.g. – Iran)

Rostow’s Development Model• Stage 1: Traditional societyStage 1: Traditional society – many engaged in agriculture

and a high percentage of country’s natural wealth allocated to “non-productive” societal segments such as the military and religious causes

• State 2: Pre-conditions for “take-off”State 2: Pre-conditions for “take-off” – An elite, well educated group initiates innovative economic activities and country begins to invest in technology and infrastructure

• Stage 3: The “take-off”Stage 3: The “take-off” – Few industries such as textiles or food products “take-off”

• Stage 4: The drive to maturityStage 4: The drive to maturity – Modern technology diffuses to many workers and workers become more skilled

• Stage 5: Age of mass consumptionStage 5: Age of mass consumption – Industry shifts to consumer goods

Self-Sufficiency• Country should spread investments throughout economic

sectors and encourage producing goods for people in country

• Imports should be limited through taxes, or limiting number of imports allowed, or by licensing

• E.G. is India, but population is growing so rapidly, this is difficult.

• Problems with this approach:– Inefficient domestic market – too small to make a profit– Companies feel they are protected from competition, so don’t

keep pace with technology– Large, often corrupt bureaucracies lead to illegal activities

• Proposed solution: World Bank, etc. lend money to LDCs to develop hydroelectric power, flood protection, etc.

Income & Demographic Change, 1980- 2005

Rates of natural increase and infant mortality have remained much higher in LDCs than in MDCs. Since 1980, the natural increase rate has declined at about the same rates in MDCs and LDCs, while the infant mortality rate has declined more rapidly in LDCs. Per capita GDP has increased more in MDCs than in LDCs during this period.

Debt as Percent of Income

Many developing countries have accumulated large debts relative to their GDPs. Much of their budgets now must be used to finance their debt.

Foreign Direct Investment Flows

Most transnational companies invest in the three core regions of North America, Western Europe, and Japan. Outside these core regions, the largest investment is in China.

Development and Debt Finance

• The 42-year graph below indicates that with few exceptions, the northern, western, wealthy, industrialized, developed nations have benefited the most from liberalized trade and economic globalization.

                                                                 

  

Foreign Direct Investment

Core and Periphery in World Economy

The Core-Periphery Model Divides the World in 3 Main Sectors

• The core - the area with greatest prosperity and power.

• The semi-periphery - the area with some control, but less than that of the core, and somewhat prosperous.

• The periphery - the area with the least power and the least amount of prosperity.

Air Pollution in Eastern Europe

Sulfate emissions in the Czech Republic and Slovakia. GIS was used to map previously secret data on air pollution after the fall of the communist regime. Extremely high levels were found in some of the main industrial areas.

  

                             

                                                                          

• Industrial air pollution from the developed world is carried on the dominant wind currents up to the arctic.

• After settling onto the tundra, snow and ice it is absorbed into the food chain.

• The people and creatures there have some of the highest concentrations of toxins in their bodies of anywhere on earth.

Key Terms• Development• Fair trade• Foreign direct

investment• Gender Empowerment

Measure (GEM)• Gender-related

Development Index (GIM)

• Gross domestic product• Human Development

Index

• Literacy rate• Primary sector• Productivity• Secondary sector• Structural adjustment

program• Tertiary sector• Value added