Less Developed Countries Charles Hauss. Comparative Politics.

Less Developed Countries (LDCs) Term “3 rd World” is obsolete since Cold War ended. Majority of the world’s countries.

Less Developed Countries (LDCs) CHARACTERISTICS Struggle economically Most are fragile democracies Charles Hauss. Comparative Politics.

Assessing Levels of Development Gross Domestic Product per capita (GDP) – The total value of goods and services produced by an economy, divided by population of the country. GDP by Sector – Agriculture, Industry, Service Human Development Index (HDI) – Health, Education, and Income Freedom House Score Corruption Index Failed State Index

Purchasing Power Parity (PPP) Estimates the buying power of income across different countries by using the U.S. as a benchmark. Ideally, the same basket of goods should cost the same in every country. PPP in LDCs are generally lower. – Cheaper labor costs, cost of living, & less productivity. Overvaluing currency can also drive up the price. The Big Mac Index (Jan 2012) Switzerland$6.81 Euro$4.43 U.S.$4.20 UK$3.82 Mexico$2.70 Russia$2.55 China$2.44 Actual Exchange 1 dollar=0.96 Swiss Franc Ideal 1 dollar=1.55 Swiss Franc – Overvalued by 38% The Economist Jan 2012

Newly Industrializing Countries (NICs) Top tier of LDCs Recent economic growth Emerging democracy Mexico