Development Chapter 9

Mahbub ul Haq ( ) Founder of the Human Development Report "The basic purpose of development is to enlarge people's choices. In principle, these choices can be infinite and can change over time. People often value achievements that do not show up at all, or not immediately, in income or growth figures: greater access to knowledge, better nutrition and health services, more secure livelihoods, security against crime and physical violence, satisfying leisure hours, political and cultural freedoms and sense of participation in community activities. The objective of development is to create an enabling environment for people to enjoy long, healthy and creative lives."

Why Does Development Vary among Countries? United Nations (UN) developed a metric to measure the level of development of every country called the Human Development Index (HDI). United Nations (UN) developed a metric to measure the level of development of every country called the Human Development Index (HDI). It is based on three factors: It is based on three factors: 1. Decent standard of living 2. Long and healthy life 3. Access to knowledge Countries group into 4 classes Countries group into 4 classes Level of development ranging from developed (Very High) to developing (Low). Level of development ranging from developed (Very High) to developing (Low).

The Human Development Index —decent standard of living, access to knowledge, long and healthy life Highest possible is 1.0 or 100% Highest possible is 1.0 or 100% Highest ranking country Norway.971 / Lowest ranking country Niger.340 Highest ranking country Norway.971 / Lowest ranking country Niger dozen lowest ranking countries from Sub-Saharan Africa 2 dozen lowest ranking countries from Sub-Saharan Africa

Human Development Index Fig. 9-1: 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).

1) A decent standard of living UN measures standard of living based on two functions: UN measures standard of living based on two functions: 1. Gross national income (GNI) Value of the output of goods and services produced in a country annually, including money that leaves and enters the country. Value of the output of goods and services produced in a country annually, including money that leaves and enters the country. Gross domestic product (GDP) is similar except it doesn’t account for money entering and leaving the country. Gross domestic product (GDP) is similar except it doesn’t account for money entering and leaving the country. Per capita GNI measures average (mean) wealth, not its distribution among citizens. Per capita GNI measures average (mean) wealth, not its distribution among citizens. 2. Purchasing power parity (PPP) Cost of living adjustment made to the GNI to indicate costs of basic living. Cost of living adjustment made to the GNI to indicate costs of basic living.

GDP per capita Average income per capita $15.00MDC vs. $2.00 LDC Average income per capita $15.00MDC vs. $2.00 LDC GDP value of the total output of goods and services produced in country, usually per year GDP value of the total output of goods and services produced in country, usually per year Per capita is dividing by total population Per capita is dividing by total population US $12 trillion/300 million=$40,000 US $12 trillion/300 million=$40, African countries and 1 Asian country have GDP below $1, African countries and 1 Asian country have GDP below $1,000

Annual GDP per Capita Fig. 9-2: Annual gross domestic product (GDP) per capita averages over $20,000 in most developed countries but under $5,000 in most less developed countries.

Types of Jobs Average per capita income is hirer in developed countries because people typically earn their living by different means. Primary Sector—jobs where materials are directly extracted from the earth by agriculture, mining, fishing, or forestry Primary Sector—jobs where materials are directly extracted from the earth by agriculture, mining, fishing, or forestry Secondary Sector—jobs where raw materials are transformed, processed or assembled into useful materials Secondary Sector—jobs where raw materials are transformed, processed or assembled into useful materials Tertiary Sector—provision of goods and services to people in return for payment Tertiary Sector—provision of goods and services to people in return for payment Agricultural workers as much as 60% of LDCs vs. less than 5% in MDCs Agricultural workers as much as 60% of LDCs vs. less than 5% in MDCs Decrease in secondary jobs in MDCs; Decrease in secondary jobs in MDCs;

Employment Changes by Sector Fig. 9-3: Percentage employment in the primary, secondary, and tertiary sectors of MDCs has changed dramatically, but change has been slower in LDCs.

Productivity Value of a particular product compared to the amount of labor needed to make it Value added—gross value of the product minus the cost of raw materials and energy $5,900 in US, $6,700 in Japan compared to around $800 in China and $100 in India

Consumer Goods Most important are goods that relate to transportation and communication Most important are goods that relate to transportation and communication Vehicles provide access to jobs and services plus distribution of products Vehicles provide access to jobs and services plus distribution of products Phones enhance interaction between providers of raw materials and customers for goods and services Phones enhance interaction between providers of raw materials and customers for goods and services Computers facilitate exchange of information between buyers and suppliers Computers facilitate exchange of information between buyers and suppliers

2) A long and healthy life UN considers good health to be an important measure of development: UN considers good health to be an important measure of development: Main health indicator contribution to the HDI is life expectancy at birth. Main health indicator contribution to the HDI is life expectancy at birth. Average life expectancies of a baby Average life expectancies of a baby Global average: 70 years Global average: 70 years Developed country: 80 years Developed country: 80 years Developing country: 68 years Developing country: 68 years Variation among regions is especially wide: Variation among regions is especially wide: Latin America 75 Latin America 75 South Asia 65 South Asia 65 Sub-Saharan Africa 55! Sub-Saharan Africa 55!

Health and Welfare Total health care expenditures exceed 8% of GDP in MDCs compared to less than 6% in LDCs Total health care expenditures exceed 8% of GDP in MDCs compared to less than 6% in LDCs MDCs intake more calories than needed, LDCs intake less MDCs intake more calories than needed, LDCs intake less In many wealthier countries, health care is a public service. Government programs pay more than 70% In many wealthier countries, health care is a public service. Government programs pay more than 70% Private individuals must pay more than half of cost in LDCs and…………….the US. Private individuals must pay more than half of cost in LDCs and…………….the US. MDCs offer public assistance to those who are sick, elderly, disabled, orphans, veterans, widows, the unemployed, or single parents. MDCs offer public assistance to those who are sick, elderly, disabled, orphans, veterans, widows, the unemployed, or single parents. In recent years, problems with these social programs have arisen as economic growth has slowed and need for benefits has increased. In recent years, problems with these social programs have arisen as economic growth has slowed and need for benefits has increased.

Health Care Expenditures per GDP Fig. 9-7: Expenditures on health care as percent of GDP, MDCs have much higher GDP and spend a greater proportion of GDP on health care than do LDCs.

Physicians per Population Fig. 9-8: Physicians per 1000 people, MDCs have three or more physicians per 1000 people compared to less than one in most LDCs.

Calories per capita Fig. 9-9: Daily available calories per capita as percent of requirements, In MDCs, the average person consumes one-third or more over the required average minimum, while in LDCs, the average person gets only the minimum requirement or less.

Private Health Care Expenditures Fig. 9-10: Private expenditure on health care as percent of total health care expenditure, Except for the US, health care is considered a public service in most MDCs. In most LDCs and in the US, most health care costs are paid by individuals.

Other Demographic Indicators of Development Number of young people is 6 times higher than older people in LDCs where it’s the same in MDCs! Number of young people is 6 times higher than older people in LDCs where it’s the same in MDCs! Infant Mortality—94% to 99% Infant Mortality—94% to 99% NIR—1.5% compared to.1% in MDCs NIR—1.5% compared to.1% in MDCs CBR—24 to 1,000 compared to 11 per 1,000 CBR—24 to 1,000 compared to 11 per 1,000 CDR—not an indicator of development; why? CDR—not an indicator of development; why?

3) Access to knowledge Education and Literacy UN considers years of schooling to be the most critical measure of the ability of an individual to gain access to knowledge needed for development. UN considers years of schooling to be the most critical measure of the ability of an individual to gain access to knowledge needed for development. Quantity of Schooling Quantity of Schooling Average Years of schooling Average Years of schooling Global: 7 years Global: 7 years Developing: 6 years Developing: 6 years Developed: 11 years Developed: 11 years Expected years of schooling Expected years of schooling Developed: 16 years Developed: 16 years Developing: 11 years Developing: 11 years

Other considerations The longer students attend school the more they learn The longer students attend school the more they learn Measure student teacher ratios and literacy rate Measure student teacher ratios and literacy rate Average student attends for 11 years in MDC Average student attends for 11 years in MDC Student teacher ratio is twice as high in LDC Student teacher ratio is twice as high in LDC MDCs publish more literature per person; dominate non-fiction and scientific publishing MDCs publish more literature per person; dominate non-fiction and scientific publishing Students in LDCs often learn in non-native language Students in LDCs often learn in non-native language Literacy rate exceeds 98% in MDCs vs. 60% Literacy rate exceeds 98% in MDCs vs. 60%

Quality of Schooling Quality of Schooling Pupil/teacher ratio Pupil/teacher ratio Global: 24 (primary school) Global: 24 (primary school) Developing: 26 (primary school) Developing: 26 (primary school) Developed: 14 (primary school) Developed: 14 (primary school) Literacy rate Literacy rate Developed: >99% Developed: >99% Developing: 70-90% Developing: 70-90%

Variations within countries darkest areas 150% above average, lightest 75% or below national average

Brazil

Why Does Development Vary by Gender? Gender Inequality Measures Gender Inequality Measures UN created the Gender Inequality Index (GII) that is based on multiple metrics. UN created the Gender Inequality Index (GII) that is based on multiple metrics. Empowerment Empowerment Defined: Ability of women to achieve improvements in status. Defined: Ability of women to achieve improvements in status. Percentage of seats held by women in the national legislature. Percentage of seats held by women in the national legislature. Percentage of women who have completed high school. Percentage of women who have completed high school. Labor Force Labor Force Female labor force participation rate defined as percentage of women holding full- time jobs outside the home. Female labor force participation rate defined as percentage of women holding full- time jobs outside the home. Highest in developed countries. Highest in developed countries. Reproductive Health Reproductive Health Maternal mortality ratio Maternal mortality ratio Adolescent fertility rate Adolescent fertility rate

Why Does Development Vary by Gender? Gender Inequality Trends Gender Inequality Trends UN asserts gender inequality has declined in nearly every country since the 1990s. UN asserts gender inequality has declined in nearly every country since the 1990s. Greatest improvements in Southwest Asia and North Africa. Greatest improvements in Southwest Asia and North Africa. U.S. is one of few developed countries where the GII has increased. U.S. is one of few developed countries where the GII has increased. Reproductive rights much lower in U.S. compared to other very high HDI countries. Reproductive rights much lower in U.S. compared to other very high HDI countries. Percentage of women in the national legislature is relatively lower than other high HDI countries. Percentage of women in the national legislature is relatively lower than other high HDI countries.

More & Less Developed Regions More developed regions More developed regions Anglo-America–Western Europe Anglo-America–Western Europe Eastern Europe–Japan Eastern Europe–Japan South Pacific South Pacific Less developed regions Less developed regions Latin America–East Asia Latin America–East Asia Southeast Asia–Middle East Southeast Asia–Middle East South Asia–Sub-Saharan Africa South Asia–Sub-Saharan Africa

More & Less Developed Regions Fig. 9-11: The less developed regions include Latin America, Sub-Saharan Africa, Middle East, South Asia, East Asia, and Southeast Asia.

Raw Materials Minerals, trees, water, power, coal, oil, natural gas, or uranium Minerals, trees, water, power, coal, oil, natural gas, or uranium UK—first developed country in late 18 th century, coal and iron ore for steel UK—first developed country in late 18 th century, coal and iron ore for steel Ran short in 19 th century thus colonialism Ran short in 19 th century thus colonialism Sustained development in Europe but retarded it in Africa Sustained development in Europe but retarded it in Africa Changes in demand for raw materials dramatically impact countries who rely on exports of it Changes in demand for raw materials dramatically impact countries who rely on exports of it