International Economics Developed to Less Developed Countries.

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Presentation transcript:

International Economics Developed to Less Developed Countries

Ranking Countries Countries are ranked by wealth A. Developed: rich B.Developing: middle C.Less Developed: poorest Stages of Economic Progress 1. Agriculture 2. Industry 3. Service

1. Low per capita GDP 2. Agricultural Economy (subsistence) 3. Poor Health Conditions (water, nutrition, disease, high infant mortality, shorter life expectancy) 4. Low Literacy Rates 5. Rapid Population Growth (ave. 6 kids vs. 2 in developed countries) –*Reasons for more kids: security for old age, free labor, more children die 6. Weak Property Rights and unstable gov’t (no protection or incentive) 1. Low per capita GDP 2. Agricultural Economy (subsistence) 3. Poor Health Conditions (water, nutrition, disease, high infant mortality, shorter life expectancy) 4. Low Literacy Rates 5. Rapid Population Growth (ave. 6 kids vs. 2 in developed countries) –*Reasons for more kids: security for old age, free labor, more children die 6. Weak Property Rights and unstable gov’t (no protection or incentive)

1. Attitudes and Beliefs: slow to change, superstitious, cultural bias… 2. Continued Rapid Population Growth: split the money more 3. Misuse of Resources: give $ to military instead of for food, corruption –*Capital Flight – removal of nations funds to other countries 4. Trade Restrictions: higher prices and smaller markets –*Don’t develop economic growth around just 1-2 products

Requirements for Economic Development 1)stable supportive government: property rights, no nationalization 2)free trade 3)incentive structure: rewarded for risk taking, taxes manageable 4)Natural Resources used wisely 5)Savings and Investment 6)Steady growth of economy and adaptation to change 7)Choose to develop what they have a comparative advantage in

How to Help Foreign Aid From governments & charities To provide humanitarian, military, and technical help From international aid agencies like the World Bank and International Monetary Fund Does not work well Foreign Investment From businesses, people, and private organizations Build businesses and organize people to help themselves Works well