1. Unit 7: Developed and Developing Economies

2. Lesson objective You should be able to
differentiate between developed and developing countries
describe developed and developing countries and reasons for their different stages of development

3. Key Words
developed
developing
Industrialised nations
development

4. Developing or Developed?
Video: Millenium Development Goals for 2015

5. Millennium Development Goals
In 2000, a total of 189 different nations belonging to the United Nations agreed to a set of millennium development goals they hope to achieve by 2015.

6. Millennium Development Goals
Eradicate extreme poverty and hunger
Achieve universal primary education
Promote gender equality and empower woman
Reduce child mortality
Improve maternal health
Combat HIV/ AIDs malaria and other diseases
Ensure environmental sustainability
Develop a global partnership for development

7. Millennium Development Goals
Progress towards achieving all these goals and targets is monitored using a range of different statistical measures and indicators
Indicators: education, healthcare, infrastructure

8. What is development?
According to World Bank, as many as half of the world’s six billion inhabitants live on the equivalent of less than $2 a day.
World bank is an international financial institution that provides loans to developing countries for capital programs.
The World Bank's official goal is the reduction of poverty.

9. What is development?
Large numbers of world’s inhabitants are mired in poverty, especially in Africa, while inhabitants of the world’s richest countries live in both relative and absolute luxury.
People in poor countries are getting wealthier over time – a process link to globalisation because poorer countries can raise their standards of living by integrating with rich countries.

10. What is development? Development:
Economic – growth in the economic wealth of
an economy
Human – health, nutrition, education and a
clean environment

11. Development Govt’s aim – continuous and sustained economic growth
expand from developing economies to developed economies
Development objectives – produce more output and quality of essential goods such as food, shelter and healthcare, reach more people in need, raise SOL
Different countries and even different regions within the same countries in the world today are at very different stages of economies development. Almost everyday on TV or in newspaper, we learn about the problems many people have to suffer living in less developed or developed economies.

12. Exercise 1: Characteristics of DC & LDC
The picture depicts typical scenes from less developed countries and developed countries.
In pairs, discuss and list what you consider to be the basic characteristics of
less developed economies
developed economies

13. Developed Country
is used to categorize countries with developed economies in which the tertiary sector of industry (R&D, pharmaceutical, entertainment industry) dominate. Developed economies are also sometimes called industrialised nations.

14. Characteristics of DC well-developed infrastructure
modern communication systems
a largely urban population
a healthy and educated labour force or high levels of literacy
majority of output, income and employment created by their service sectors rather than manufacturing

15. Characteristics of DC
wide range of industries with firms of different sizes
wide variety of goods and services
competence in high tech and science
high Human Development Index (HDI)

16. Less Developed Country
is used to categorize countries with developing economies in which the agricultural industry dominate. LDCs are often called developing economies, suggesting that have low level of economic development and their industrial structure is developing.

17. Characteristics of LDC
low level of economic development
lack of sufficient or poor infrastructure
low levels of literacy due to lack of education
Poor housing condition & lack of access to clean water
undeveloped communication networks

18. Characteristics of LDCs
labor supply constraints
poor farming methods
very few firms producing other goods and services
not enough food to feed a growing population (overpopulation)
capital shortages
undeveloped financial markets

19. Characteristics of LDCs
a relatively low standard of living (live in poor housing condition and no access to clean water)
moderate to low Human Development Index (HDI)

20. Examples of DC Examples of LDCs
Australia,  Japan, Singapore, South Korea, Taiwan, United Kingdom & United States
Examples of LDCs
Cambodia, Vietnam, Haiti, South Africa & North Korea

21. Emerging economies Also known as newly industrialised countries
Undergoing significant growth in their industries and infrastructure
but they have yet to display the full range of characteristics of modern developed economies

22. Emerging economies
Some countries are developing rapidly, such as India and China, and some Eastern European countries such as Armenia and Georgia,.

23. Development Indicators

24. 1) Human Development Index (HDI)
is a composite statistic used as an index to rank countries by level of "human development" and separate developed (high development), developing (middle development), and underdeveloped (low development) countries.
maximum possible value of 1

25. 1) Human Development Index (HDI)
Health, diet and lifestyle, as measured by life expectancy at birth,
Knowledge and education, as measured by the adult literacy rate and school and college enrolment rates,
Standard of living, as measured by gross domestic product per capita

26. 2) GDP per capita or average income per person
most commonly used comparative measure of development
Developed countries tend to have relatively high GDP per capita

27. 2) GDP per capita
GDP is a narrow measure of economic development or welfare in a country
does not take into account of what people can buy with their income, access to health & education, the quality of environment or level of security against crime and violence

28. 2) GDP per capita
Calculating average GDP per person also tell us nothing about how incomes are distributed between populations

29. 3) Population on less than $1 per day
Better measure of the level of poverty in a country is the proportion of people living on very low incomes, usually $1 or $2 per day

30. 4) Life expectancy at birth
People in DC tend to live longer than people in LDC because they tend to have better standards of living and access to good food and healthcare.
In contrast, malnutrition, poor sanitation, lack of access to healthcare, war and famines mean that many people in LDC do not live to old age

31. 4) Life expectancy at birth
Other health-related indicators include baby and mother mortality rates, the proportion of children and adults receiving against disease, & death rates from various disease including HIV/Aids

32. 5) Adult literacy rate
A good measure of education provision in an economy is the proportion of the adult population that is able to read and write.
Other education-related indicators include school and college enrollment and completion rates among children and young adults.

33. 6) Access to safe water supplies and sanitation
Clean water is a necessity and safe, clean sanitation can help stop the spread of diseases.
These are generally available to most people living and working in developed countries.
Yet, only around half of all people in LDC had access to good sanitation.

34. 7) Ownership to consumer goods
Low incomes and the lack of an efficient production and distribution system for goods and services in LDC means ownership of consumer goods such as washing machines, PC, telephones is low compared to many DC.
Fast and efficient communications are a necessary factor in the development of an economy.

35. 8) Proportion of workers in agriculture compared to industry and services
High incomes in DC mean that people have money to spend on shops, eating out at restaurants and leisure activities.
They also want banks, insurance, public transport, holidays and many other services.
The large number of firms located in Dc also requires a range of business services.

36. 8) Proportion of workers in agriculture compared to industry and services
As a result, most employed people in DC work in services while most employees in LDC work in agriculture.
However, unemployment can be high in LDC because there is so little work available.
Many people instead try to self-sufficient and produce food for their families.

37. 8) Proportion of workers in agriculture compared to industry and services
Any surplus can be sold at local markets to earn some money or exchanged for other goods and services through barter.

38. Reasons for low economic development

39. (i) An over- dependence on agriculture to provide jobs and incomes
More people in less developed economies work in farming than in industry and services compared to developed nations.
Many produce only enough food for themselves and their families to live on and very little surplus they can sell to earn money.

40. (i) An over- dependence on agriculture to provide jobs and incomes
In some areas there has been overfarming which means the land is no longer any good for growing crops.
Failure of rains to arrive in some areas due to global climate change has also meant crops can no longer be grown for people to survive on.

41. (ii) Domination of international trade by developed nations
The few natural resources less developed countries possess, like coffee and sugar, are bought in vast quantities by developed countries.
The developed countries use their power to pay a low price for these resources, and then use them to make other goods and services for their own people and for sale to less developed countries at very high prices.

42. (ii) Domination of international trade by developed nations
Producers in less developed countries have not been able to compete as a result, they have lost sales, incomes and jobs.
Many less developed countries feel they are unfairly treated by the rich developed nations.

43. (iii) Lack of capital
While incomes remain low and their productions grow quickly, less developed countries have found they must use all their money on the purchase of basic necessities, such as food and clothing, leaving little money to invest in the making of new machinery and building of factories.

44. (iii) Lack of capital
Without these capital goods, less developed countries will not be able to produce more goods and services they need and which they could export to earn more money from overseas trade.
Less developed countries will never develop without the help of more machines and factories, that is, without capital goods.

45. (iii) Lack of capital
To buy goods, less developed countries need to earn more money.
This money can only come from the rich and developed countries.
So far, the developed countries have been unwilling to help.

46. (iii) Lack of capital
More money for less developed countries means less money for the developed world.
This is a prime example of scarcity and opportunity costs.

47. (iv) Insufficient investment in education, skills and healthcare
Many people in many less developed countries do not have access to basic education’ training and healthcare which can help them become healthier, more productive and more innovative workers.

48. (iv) Insufficient investment in education, skills and healthcare
Better education about family planning may also help to reduce birth rates and improve living standards.
If workers are uneducated and lack of skills then industry may be unable to employ them.

49. (v) Low levels of investment in infrastructure
Less developed countries have a poor transport (road and rail) and communications networks.
This makes travel and access to rural areas, and the sharing of information, very difficult.

50. Many less developed countries lack industries and services.
(vi) Lack of an efficient production and distribution system for goods and services
Many less developed countries lack industries and services.
If incomes are low, there is little incentives for businesses to set up different shops and retail centres.

51. (vi) Lack of an efficient production and distribution system for goods and services
If transport is difficult outside of cities then people from rural areas cannot travel to cities to shops, and it is also difficult to take goods and services to rural communities.

52. (vii) High population growth
Less developed countries have a large and growing population.
This means that the available goods and services have to be shared among more and more people.

53. (viii) Other factors
Unstable and corrupt governments, and wars with neighbouring nations, have often blighted to the development of some less developed countries.
Money that could have been used to invest in economic development has in some cases been misused by corrupt officials or squandered on buying arms and fighting wars.

54. Some important differences
Developing economics, like small industrial countries, tend to be much more open to trade in goods and services than are the major industrial countries.
Developing countries typically have little control over the prices of goods they export and import.
Over half of the exports in developing countries typically consist of agricultural and primary commodities.

55. Poverty What is poverty? How is poverty measured?
What are the causes of poverty?

56. Poverty is
having little or no money, and few or no material possessions
associated with need
lack of resources
lack of education
hunger
little or no shelter
powerlessness

57. How do you know someone is poor?
in Canada, we have the poverty line.
The poverty line is at a certain income per year on a chart.
Anyone who makes this amount of income or less each year is considered to be below the poverty line, and therefore living in poverty.

58. How do you know someone is poor?
Seeing someone lying on the street with a sleeping bag, or carrying around their belongings in a bag, will be assumed that they are poor.
If a student continually brings no food to school, it may be thought that they do not have enough money for food.

59. How do you know someone is poor?
In developing countries, poverty could be measured by the amount of materialistic goods one has.
The UN uses a human poverty index to rank developing and developed countries

60. Human Poverty Index
Survival: the likeliness of death at a relatively early age and is represented by the probability of not surviving to ages 40 (LDC) and 60 (DC)
Knowledge: being excluded from the world of reading and communication and is measured by the percentage of adults who are illiterate.
Decent standard of living: In particular, overall economic provisioning.

61. Human Poverty Index Developing countries Developed countries
Probability at birth dying before at the age of 40
Probability at birth dying before at the age of 60
Percentage of people unable to read or write
Population below income poverty line
Population with less than 50% of average income
Population without sustainable access to an improved water source
Proportion of people unemployed for 12 months of more
Proportion of underweight children

62. HPI vs HDI
only real difference is the variables each uses to compute the final Index. The
HDI examines positive signs of development, such as life expectancy, while the HPI looks at negatives.
In a nutshell, the HDI increases the more GOOD things a country has, while the HPI decreases the less BAD things a country has.

63. Where do we see poverty?
On television
On the streets
In our schools

64. Give a one word description about what you were thinking while watching the video
poverty
sicknesses
sadness
guilt
innocence
fear

65. Wanting a meal
This photograph showing a starving Sudanese child being stalked by a vulture won Kevin Carter the 1994 Pulitzer Prize for feature photography.
What are the odds the little girl is alive today?  Not very high, I'd say.  If she is alive, what quality of life is she likely to have?  She almost certainly has permanent damage from her period of starvation during crucial development, both before and after birth.