1. Developing Countries Chapter 19

2. Goals & Objectives 1. Plight of developing countries. 2. Obstacles to development. 3. GNP among various countries. 4. Stages of economic development. 5. Internal & external funds for development. 6. International lending agencies. 7. Regional cooperation & growth.

3. Developing Countries Average GNP is a fraction of industrialized countries: Africa, Asia, Latin America. Average GNP is a fraction of industrialized countries: Africa, Asia, Latin America. Concerns: “moral responsibility” to aid underdeveloped dictatorships? Concerns: “moral responsibility” to aid underdeveloped dictatorships? Per Capita Income: 1.2 billion people live on a $1 per day. Per Capita Income: 1.2 billion people live on a $1 per day. Effects of: Command Economy’s.Effects of: Command Economy’s.

4. International Agencies & Diplomacy World Bank: Industrialized countries finance developing International Monetary Fund: Finances the development of industry in underdeveloped countries.

5. Free Trade or Nation-States?

6. Purpose of IMF & World Bank 1. Access to resources. 1. National Sovereignty? 2. International treaties? 3. International conflicts? 4. Foreign Aid?

7. Obstacles to Development 1. Population Growth: underdeveloped nations have the highest fertility rates and the lowest life expectancies. 1. Population Growth: underdeveloped nations have the highest fertility rates and the lowest life expectancies. Crude birthrate: live births per 1000.Crude birthrate: live births per 1000. Life expectancy: average lifespan.Life expectancy: average lifespan. Zero population growth (ZPG): average number of births & deaths balance.Zero population growth (ZPG): average number of births & deaths balance.

8. Population & Development

9. Obstacles to Development 2. Natural Resources and Geography: Japan, Hong Kong, Taiwan, New Zealand, have all overcome this obstacle with Democratic governments and free trade policies, low taxes; Free Markets. 2. Natural Resources and Geography: Japan, Hong Kong, Taiwan, New Zealand, have all overcome this obstacle with Democratic governments and free trade policies, low taxes; Free Markets.

10. GDP & Resources

11. Obstacles to Development 3. Education and Technology: the lack of education due to large numbers of family members and the necessity to work for the family to provide basic needs. 3. Education and Technology: the lack of education due to large numbers of family members and the necessity to work for the family to provide basic needs.

12. Education & Economic Growth

13. Obstacles to Development 4. Religion: Amish & Mennonites choose traditional economy lifestyle. 4. Religion: Amish & Mennonites choose traditional economy lifestyle. Hindus & Buddhists: choose traditional economy lifestyles. 20% of world.Hindus & Buddhists: choose traditional economy lifestyles. 20% of world. Catholics, Jews & Protestants: material wealth over religious beliefs; market based economy.Catholics, Jews & Protestants: material wealth over religious beliefs; market based economy. Muslims: between Hindus and Jews; Command Economy’s.Muslims: between Hindus and Jews; Command Economy’s.

14. Religion & Poverty

15. Obstacles to Development 5. External Debt: too much credit with the World Bank and the IMF. 1.Default: not repaying borrowed money. 1. Detroit, Michigan; Prichard, Alabama. 2.U.S. Debt: 17.3 Trillion dollars.

16. Debt & Economic Growth

17. Obstacles to Development 6. Capital Flight: legal or illegal export of a nation ’ s currency. 6. Capital Flight: legal or illegal export of a nation ’ s currency. Loss of faith in nation or economy and relocate.Loss of faith in nation or economy and relocate. Causes: High personal & business taxes Causes: High personal & business taxes Outsourcing: relocation of industry to avoid taxes and regulations. Outsourcing: relocation of industry to avoid taxes and regulations.

18. High Taxes = Capital Flight

19. Obstacles to Development 7. Corruption: Bribes and War. Rich government officials and poor citizens. 7. Corruption: Bribes and War. Rich government officials and poor citizens. 8. War and its Aftermath: 8. War and its Aftermath: Somalia, Vietnam, Cambodia, Afghanistan, Iraq, EthiopiaSomalia, Vietnam, Cambodia, Afghanistan, Iraq, Ethiopia

20. War & Corruption Dangers

21. Stages of Economic Development 1. Primitive Equilibrium: no formal economic organization. Traditional Economy’s. 2. Transition: Economic & cultural changes (Religion). People question cultural traditions and transition to new lifestyles. 3. Takeoff: Traditional customs put aside. Saving & investing begin. New technology adopted and used to create efficiency.

22. Stages of Economic Development 4. Semi-development: Heavy spending on capital investment, industry grows, new technological advancements take place. 5. High Development: Wants and needs in abundance; attention towards service and luxury goods.

23. Priorities for Developing Countries 1. Invest more in people and education. 2. Create a climate of free enterprise. 3. Open economics to free trade. 4. Curb inflation, reduce borrowing, decrease deficits. Allow profits. U.S. Debt, inflation, borrowing? U.S. Debt, inflation, borrowing?

24. Priorities for Developing Countries Expropriation: eliminate political and economic distrust; eliminate command economics where the State takes control of private and foreign property. Expropriation: eliminate political and economic distrust; eliminate command economics where the State takes control of private and foreign property. Socialism & Communism are obstacles to development. Socialism & Communism are obstacles to development.

25. International Agencies 1. IMF—International Monetary Fund –Intervenes into other nation ’ s monetary and fiscal policies by supporting or opposing politically their style of government. –A. World Bank: provides loans to underdeveloped nations.

26. IMF Influence & Power

27. Regional Cooperation  1. Free-trade area: two or more nations agreeing to reduce trade barriers  2. Customs union: a free trade area with the inclusion of uniform tariffs for nonmember countries

28. Regional Cooperation The European Union: (EU) 1993 same year as NAFTA. Euro: one currency for member nations

29. European Union (EEC) or (EU)

30. Regional Cooperation ASEAN: 2008, Indonesia, Malaysia, Singapore, Philippines, Thailand. The Association for Southeast Asian Nations.

31. ASEAN Map

32. Regional Cooperation  OPEC: Organization of Petroleum Exporting Countries: 1960 Cartel: group of producers agreeing to limit production to control prices and profits. U.S. wealth: Trillions transferred to OPEC nations for oil.

33. OPEC Member Nations