Growth & Less Developed CountriesThe International Economy

GDP per capita Value of final goods produced/total population

IACs

• GDP among top 27 in the world

• Market economy based on technological advancement

• Well-educated labor

LDCs

• ≈ 150 countries with low GDP

• Economy based on agriculture

• Uneducated labor

LDCs

• Poorest regions are S Asia and Sub-Saharan Africa

Quality-of-Life Indicators for Selected Quality-of-Life Indicators for Selected Countries, 2009Countries, 2009

United States 46,443 78 8 % 99% 7,768 8

Japan 39,573 83 4 99 4,129 27

China 3,566 73 22 81 1,433 93

Bangladesh 559 64 61 43 161 108

India 1,033 65 72 61 510 77

Egypt 2,450 71 36 71 843 75

Mozambique 456 42 168 48 420 116

CountryGDP per Capita

Life Expectancy

(years)

Infant Mortality Rate (%)

Literacy Rate (%)

Per Capita Energy Consumption

Economic Freedom Rank

Economic Growth/Development

• Abundant natural resources

• Investment in human resources

• Accumulation of capital

• Technological progress

• Political stability

Vicious circle of poverty

• The trap in which countries are poor because they cannot save and invest, but they cannot save and invest because they are poor

LDC Governments Need to Stabilize to Attract Foreign Investment

• Law & Order: legal system, monetary value, property ownership

• Infrastructure: transportation, communications, and education system

• International Trade: market exchange rates

AID

• Agency in charge of U.S. aid to foreign countries

• 1% of U.S. budget is spent on aid to foreign countries

World Bank

• Lending agency that makes long-term, low-interest loans and provides technical assistance to LDCs

IMF

• The lending agency that makes short-term conditional loans to developing countries