1. Development

2. Development MDCs Definition: LDCs More developed countries
On wealthier side of development spectrum
LDCs
Less developed countries
On the economically poorer side of the development spectrum
Definition:
The process of improving the material condition of people through growth and diffusion of technology and knowledge
Every place, regardless of size, exists at some level of development

3. Measuring development
There are several ways to measure development
Different factors:
Gross Domestic Product (GDP)
Value of total outputs of goods and services produced in a country, usually over one year
Gross National Product (GNP)
Includes all goods and services owned and produced by a country overseas
Purchasing Power Parity (PPP)
Measurement tool for each currency to buy an equal amount of goods
Allows economists to make “apple to apple” comparisons
Informal Sector
Includes all business transactions that were not reported by the government
Not calculated in GDP
Exists for several reasons

4. Human Development Index
Formula used to measure a country’s development level and compare it to other regions and countries on the rank-ordered list of countries
Country’s level of development can be distinguished by three factors:
Economic
Social
Demographic
HDI examines all three factors
HDI created by United Nations
Created by selecting:
One economic factor (Gross Domestic Product)
Two social factors (literacy rate, education)
One demographic factor (life expectancy)
Highest HDI is a 1.000, or 100%
Lowest score is a 0.000, or 0%

5. Map of HDI

6. Economic Indicator: GDP
Gross Domestic Product per capita
GDP
Definition:
value of the total output of goods and services produced in a country, normally during a year
Divide GDP by total population to get the average contribution from individuals
For example:
The GDP for the U.S. in 2009 was $14 trillion
Divided by pop of 307 million= $46,600
In MDCs GDP per capita exceeds $30,000
In LDCs less than $3,000
The higher the per capita GDP, the greater the potential for ensuring that all citizens enjoy comfortable life
GDP does not perfectly measure country’s development
GDP measures average (or mean) wealth, not its distribution

7. GDP per Capita

8. Three other Economic Indicators
The other economic indicators useful in distinguishing between MDCs and LDCs
Types of jobs
Worker productivity
Availability of consumer goods

9. Types of Jobs Five categories
Primary
Directly extract resources from earth
Secondary
Manufacturing
Tertiary
Provision of goods and services
Quaternary
Creation and transfer of information
Quinary
Highest level decision making
Distribution of jobs among workers differs greatly between MDCs and LDCs
% of primary jobs in LDCs is 60%, MDCs is less than 5%
High agricultural % means people producing food for mainly survival, not sale

10. Productivity Definition:
Value of a particular product compared to the amount of labor needed to make it
Workers in MDCs are more productive than LDCs
Productivity can be measured by the value added per capita
Value added: gross value of the product minus the costs of raw materials and energy
$5,000 in U.S., $7,000 in Japan
$500 in China, $100 in India
MDCs
Workers produce more with less effort due to technology (machines, tools, equipment)
LDCs rely solely on human labor and animal power
Larger per capita GDP in MDCs in part pays for the manufacture and purchase of machinery
Which in turn makes workers more productive and generate more wealth

11. Consumer Goods
Part of the wealth generated in MDCs is used to purchase goods and services
Especially important are goods and services related to transportation and communications
Including motor vehicles, telephones, and computers
Products that promote better transportation and communications are accessible to virtually all residents in MDCs
Vital to the economy’s function and growth
In LDCs, these products do not play a major role in daily life
LDCs, most people can not afford them
Most people familiar with goods, see them as symbol of development
Possession of consumer goods is not universal in LDCs
“haves” and “have-nots”
Technological change may help to reduce the gap in access to communications betweens MDCs and LDCs
Cell phone ownership rapidly expanding
Don’t require costly investment of installation of wires

12. Social Indicators of Development
MDCs use part of their wealth to provide schools, hospitals, and welfare services
Result= people are better educated, healthier, and better protected from hardships
Infants more likely to survive, adults live longer
In turn, well-educated, healthy, and secure population can be more economically productive
Social Indicators
Education/ Literacy
Health/ Welfare

13. Education and Literacy
In general:
Higher the level of development = greater quantity and quality of a country’s education
Quality of education is measured in two ways:
Student/teacher ratio
LDCs more students per teacher
= less personalized instruction
Literacy rate
Percentage of a country’s people who can read and write
98% + in MDCs, 60% in LDCs

14. Health and Welfare People are healthier in MDCs than LDCs
Health influenced by diet
MDCs:
eat more calories and protein
LDCs:
receive less than the daily minimum allowance of calories and proteins
MDCs health care is a public service
Available at little to no cost
Government programs pay for more than 70% of healthcare costs in European countries
Exception U.S. where private individuals are required to pay an average of 55% health care costs, more similar to LDCs
MDCs use part of their wealth to protect people that cannot work
Public assistance for sick, elderly, poor, disabled, orphaned, veterans of war, widows, unemployed, or single parents
Countries in NW Europe provide highest level of public-assistance
Denmark, Norway, Sweden
Today MDCs are having difficulty maintaining these programs

15. Demographic Indicators of Development
MDCs display demographic differences from LDCs
Demographic Indicators
Used by UN’s HDI:
Life expectancy
Other:
Infant mortality rate
Natural increase rate
Crude birth rates

16. Demographic Indicators
Natural Increase Rate
LDCs having more babies!
Averages 1.5% in LDCs
Averages 0.2% in MDCs
Natural increase strains a country’s ability to provide hospitals, schools, jobs, and other services make its people healthier and more productive
LDCs must allocate resources for expanding population rather than improve care for current population
Crude Birth Rate
LDCs have higher NIRs because they have a higher CBR
LDCs= 23 per 1,000
MDCs= 12 per 1,000
CBR does not indicate a society’s level of development
High # of old people in MDCs
Life expectancy
Better healthcare and welfare in MDCs permit people to live longer
Babies born today can expect to live into their 60s in LDCs, 70s in MDCs
Gap in LE greater for females than males
Females – 13 years longer in MDCs
Males- 10 years longer in MDCs
MDCs have a higher % of older people
= high dependency ratio
Infant Mortality Rate
Better health allows more infants to survive in MDCs
6% die in LDCs, less than 1% in MDCs
Greater in LDCs because:
Babies die from malnutrition, lack of medical attention, dehydration, poor medical practices

17. Distribution of MDCs and LDCs
Countries of the world can be categorized into nine major regions according to their level of development
More Developed Regions
North America
Europe
Russia
Japan
Oceania
Less Developed Regions
Latin America
East Asia
Southwest Asia/ N. Africa
Southeast Asia
Central Asia
South Asia
Sub-Saharan Africa

18. The Development Gap Definition: North-South Gap
Widening difference between development levels in MDCs and LDCs
MDCs are improving in their development levels faster than are LDCs
In the last decade, the GDP nearly tripled in MDCs but only doubled in LDCs
The rate of population increase fell by nearly 85% in MDCs, but by less than 5% in LDCs
North-South Gap
Refers to the pattern that MDCs are primarily located in the Northern Hemisphere
LDCs are mainly located in the Southern Hemisphere

19. Gender Inequality
A country’s overall level of development masks inequalities in the status of men and women
Gender inequality exists in every country of the world
No country in the world where women are treated as well as men
To measure extent of each country’s gender inequality the UN has created two indexes:
Gender-related development index (GDI)
Compares level of women’s development with that of both sexes
Gender Empowerment Measure (GEM)
Compares the ability of women and men to participate in economic and political decision making

20. Gender-Related Development Index (GDI)
Constructed similar to the HDI
Economic indicators
Per capita female income as a % of per capita male income
Social indicators
# of females enrolled in schools compared to # of males
% of literate females compare to males
Demographic indicators
LE of females compared to males
The GDI penalizes a country for having a large disparity between the well-being men and women
Example: Hungary and Saudi Arabia
A country with complete gender equality would have a GDI of 1.0
A high GDI means that both men and women have achieved a high level of development
A low GDI means that women have a low level of development compared to men

21. Gender Empowerment Measure (GEM)
GEM measures the ability of women to participate in the process o achieving improvements in their status
Political and economic power
GEM is calculated using:
Economic
Per capita female income as a % of per capita male income
% of professional and technical jobs held by women
Political
% of administrative jobs held by women
% of members of the national parliament who are women
Highest score= 1.0
Regions with highest GEMs are:
North America
Northern Europe
Oceania
Regions with lowest GEMS are:
Africa
Asia