The Least Developed Countries(LDCs)

Note: Cape Verde was removed from the list in 2007 so is no longer a LDC (therefore there are 49)

LDCs Since 1968 the world's poorest countries have

been classed as least developed countries. UN calls them 'the poorest and most

economically week of the developing countries with formidable economic, institutional and human resource problems, which are oftern compounded by geographical handicaps and natural and man-made disasters'.

This list contains 49 countries: 33 in Africa (all sub-saharan) Others in southeast Asia and a number of small

island states in the Pacific.

Features of LDCs:

Low incomes, measured as less than $800 GDP per capita per year averaged over a 3-year period.

Human resource weaknesses: based upon indicators of nutrition, health, education levels and literacy.

Economic vulnerability: share of manufacturing in the GDP, per capita energy consumption, and population displaced by natural disasters.

Other Problems in LDCs: Ongoing and widespread conflict – e.g. Darfur

in Sudan. Extensive political corruption. Lack of political and social stability. A form of government that is authoritarian in

nature, such as a dictatorship.

Quality of Life People live in poverty in all LDCs. A large majority of the population has an

income too small to meet their basic needs. In 2005 it was estimated that 277 million people

were living on less than $1 per day. In some cases incidence of poverty has been

falling but the actual number has been increasing over the long term.

Still dependent on external finance. In 2006 net aid payments reached $28 billion.

Debt From the 1970s countries developing countries

found themselves in a dbet crises. The problem can be attributed to:

Increasing oil prices. Higher interest rates. Falling export prices. Problems of domestic economic management.

No hopes of the debts being repaid and heavy interest accumulating.

By October 2007 17 LDCs were recing debt relief under the HIPC initaitive (Heavily Indebted Poor Countries).

A possible path for development???

Rostow's Model

The Rostow Model One of the first and most simple models to

account for economic growth. Put forward by W.W. Rostow in 1960. Based on a study of 15 countries, mainly in

Europe. He suggested all countries had the potential to

break the cycle of poverty and develop through the five linear steps.

Time

Leve

l of

Dev

elop

men

t

1. The Traditional

Society

2. Preconditions for take-off

3. Take-Off

4. The drive toThe maturity

5. High massconsumption

Stage 1: Traditional Society

Subsitence economy based mainly on farming. Very limited technology or capital to process

raw material. No development of industries and services.

Stage 2: Preconditons for take-off

Often needs external injection of cash to move into this stage.

Extractive industries develop. Agriculture is more commecialised and

becomes mechanised. There are some technological improvements

and a growth of infrastructure. Development of a transport system encourages

trade. A single industry begins to dominate.

Stage 3: Take-Off

Manufacturing industries gwo rapidly. Airports, roads and railways are built. Political and social adjustments are necessary

to adapt to the new ways of life. Growth is limited to one or two parts of the

country (growth poles) and to one or two industries (magnets).

Numbers in agricultures decline.

Slide 4: The Drive to Maturity

Growth is self-sustaining. Economic growth spreads to all parts of the

country and leads to an increas in the number and types of industry (multiplier effect).

More complex transport systems develop and manufacturing expands as technology improves.

Some early industries decline. There is rapid urbanisation.

Stage 5: The age of high mass-consumption

Rapid expansion of tertiary industries and welfare facilities.

Employment in service industries grows but declines in manufacturing.

Industry shits to the production of durable consumer goods.

Approximate date of reaching a new stage of development:

Stage 2 3 4 5

UK 1750 1820 1850 1940

USA 1800 1850 1920 1930

Japan 1880 1900 1930 1950

Venezuela 1920 1950 1970 -

India 1950 1980? - -

Ethiopia - - - -

Criticisms of Rostow's Model

Rostow suggested that capital was needed to make countries development – despite large injections of aid countries remailn at traditonal stage.

Countries that move towards take-off stage have occurred huge national debts.

Historical evidence indicates this sequence is not universal.

ACTIVITY

Complete Rostow model 'Living Graph Activity'

Homework

Read page 197 – 201 Answer questions page 201 (all parts in detail –

e.g. more than a page)