- Information
- AI Chat
Chars of the Developing World
None
Course
Applied Economics (Econ 11)
39 Documents
Students shared 39 documents in this course
University
University of San Agustin
Academic year: 2019/2020
Uploaded by:
Anonymous Student
This document has been uploaded by a student, just like you, who decided to remain anonymous.
University of San Agustin
Preview text
Characteristics of the Developing World: Diversity and Commonality
It is important to bear in mind that there is a great deal of diversity throughout the developing world, even within these areas of broad commonality.
- Lower levels of living and Productivity
- At low income levels, a vicious cycle may set in, whereby low income leads to low investment in education and health as well a plant and equipment and infrastructure, which in turn leads to low productivity and economic stagnation. This is known as a poverty trap or “circular and cumulative causation”.
- LDCs are themselves a very diverse group with greatly differing development challenges.
- One common misconception is that low incomes result from a country’s being too small to be self-sufficient or too large to overcome economic inertia. However, there is no necessary correlation between country size in population or area and economic development.
- Lower levels of Human Capital
- Human capital – health, education, and skills – is vital to economic growth and human development.
- The under-5 mortality is 17 times higher in low-income countries than in high income countries, although great progress has been made since 1990
- Higher levels of inequality and absolute poverty
- The enormous gap in per capita incomes between rich and poor nations is not the only manifestation of the huge global economic disparities.
- To appreciate the breadth and depth of deprivation in developing countries, it is also necessary to look at the gap between rich and poor within individual developing countries.
- Higher population growth rates
- Global population has skyrocketed since the beginning of the industrial era, from just under 1 billion in 1800 to 1 billion in 1900 and to over 6 billion by 2000. World population topped 7 billion by 2012.
- The birth rate is about three-times as high in the low-income countries as in the high-income countries. Most Populous countries in millions as of 2008:
China 1,325 Brazil 192 India 1,140 Pakistan 166
United States 304 Japan 128 Indonesia 227 Philippines 90
- Greater social fractionalization
- LDCs often have ethnic, linguistic, and other forms of social divisions, called fractionalization. This is associated with civil strife and even violent conflict, which can lead to developing societies to divert considerable energies to working for political accommodations if not national consolidation.
- It is one of a variety of governance challenges many developing countries face.
- The greater the ethnic, linguistic, and religious diversity of a country, the more likely it is that there will be internal strife and political instability.
- If development is about improving human lives and providing a widening range of choice to all, racial, ethnic, caste, or religious discrimination is harmful.
- Larger rural populations but rapid rural-to-urban migration
- One of the hallmarks of economic development is a shift from agriculture to manufacturing and services.
- In developing countries, a much higher share of the population lives in rural areas, and correspondingly fewer in urban areas
- A massive population shift is also under way as hundreds of millions of people are moving from rural to urban areas, fueling rapid urbanization, with its own attendant problems
- The world as a whole has just crossed the 50% threshold: more people live in cities than in rural areas
- Lower levels of industrialization and manufactured exports
- Industrialization is associated with high productivity and incomes and has been a hallmark of modernization and national economic power
- The middle income countries are rapidly catching up with the developed world in the share of manufactured goods in their exports, even if these goods are typically less advanced in their skill and technology content.
- Adverse geography
- Developing countries are primarily tropical and subtropical, and this has meant that they suffer more from tropical pests and parasites, endemic diseases such as malaria, water resource constraints, and extreme heat.
- A great concern going forward is that global warming is projected to have its greatest negative impact on Africa and Southeast Asia.
- The extreme case of favourable physical res ource endowment like in the oil rich Persian Gulf states.
- Underdeveloped markets
- In many developing countries, legal and institutional foundations for markets are extremely weak.
- Imperfect markets are incomplete information are far more prevalent in developing countries, with the result that domestic markets, notably but not only financial markets, have worked less efficiently
- Some aspects of market underdevelopment are that they often lack (1) a legal system that enforces contracts and validates property rights; (2) a stable and trustworthy currency; (3) an infrastructure of roads and utilities that results in low transport and communication costs so as to facilitate trade; (4) a well-developed and efficiently regulated system of banking and
Was this document helpful?
Chars of the Developing World
Course: Applied Economics (Econ 11)
39 Documents
Students shared 39 documents in this course
University: University of San Agustin
Was this document helpful?
Characteristics of the Developing World: Diversity and Commonality
It is important to bear in mind that there is a great deal of diversity throughout the developing
world, even within these areas of broad commonality.
1. Lower levels of living and Productivity
- At low income levels, a vicious cycle may set in, whereby low income leads to low
investment in education and health as well a plant and equipment and infrastructure, which
in turn leads to low productivity and economic stagnation. This is known as a poverty trap
or “circular and cumulative causation”.
- LDCs are themselves a very diverse group with greatly differing development challenges.
- One common misconception is that low incomes result from a country’s being too small to
be self-sufficient or too large to overcome economic inertia. However, there is no necessary
correlation between country size in population or area and economic development.
2. Lower levels of Human Capital
- Human capital – health, education, and skills – is vital to economic growth and human
development.
- The under-5 mortality is 17 times higher in low-income countries than in high income
countries, although great progress has been made since 1990
3. Higher levels of inequality and absolute poverty
- The enormous gap in per capita incomes between rich and poor nations is not the only
manifestation of the huge global economic disparities.
- To appreciate the breadth and depth of deprivation in developing countries, it is also necessary to
look at the gap between rich and poor within individual developing countries.
4. Higher population growth rates
- Global population has skyrocketed since the beginning of the industrial era, from just under 1
billion in 1800 to 1.65 billion in 1900 and to over 6 billion by 2000. World population topped 7
billion by 2012.
- The birth rate is about three-times as high in the low-income countries as in the high-income
countries.
Most Populous countries in millions as of 2008:
China 1,325 Brazil 192
India 1,140 Pakistan 166
United States 304 Japan 128
Indonesia 227 Philippines 90
