unit 7: developed and developing economies. lesson objective you should be able to 1.differentiate...

Unit 7: Unit 7: Developed and Developed and Developing Economies Developing Economies

Lesson objective

You should be able to

1. differentiate between developed and developing countries

2. describe developed and developing countries and reasons for their different stages of development

1. developed

2. developing

3. Industrialised nations

4. development

Key Words

Developing or Developed?

Video: Millenium Development Goals for 2015

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.


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


Progress towards achieving all these goals and targets is monitored using a range of different statistical measures and indicators

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.


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.


Development:

Economic – growth in the economic wealth of

an economy

Human – health, nutrition, education and a

clean environment

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

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 ofless developed economiesdeveloped economies

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.

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

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)

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.

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

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

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)

Examples of DC

Australia, Japan, Singapore, South Korea, Taiwan, United Kingdom & United States

Examples of LDCs

Cambodia, Vietnam, Haiti, South Africa & North Korea

Emerging economieso Also known as newly industrialised

countries

o Undergoing significant growth in their industries and infrastructure

o but they have yet to display the full range of characteristics of modern developed economies

Emerging economiesoSome countries are developing rapidly,

such as India and China, and some Eastern European countries such as Armenia and Georgia,.

Development IndicatorsDevelopment Indicators

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

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

1) Human Development Index (HDI)

or average income per person most commonly used comparative

measure of development Developed countries tend to have

relatively high GDP per capita

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

2) GDP per capita

Calculating average GDP per person also tell us nothing about how incomes are distributed between populations

2) GDP per capita

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

3) Population on less than $1 per day

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

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

4) Life expectancy at birth

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.

5) Adult literacy rate

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.

6) Access to safe water supplies and sanitation

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.

7) Ownership to consumer goods

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.

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.


Any surplus can be sold at local markets to earn some money or exchanged for other goods and services through barter.


Reasons for low Reasons for low economic developmenteconomic development

(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.

(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.

(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.

(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.

(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.


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.


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.


More money for less developed countries means less money for the developed world.

This is a prime example of scarcity and opportunity costs.

(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.

(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.

(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.

(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.

(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.

(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.

(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.

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.

PovertyWhat is poverty? How is poverty measured? What are the causes of poverty?

Poverty ishaving 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

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.

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.

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

Human Poverty IndexSurvival: 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.

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

• 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

HPI vs HDIonly 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.

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

Give a one word description about what you were thinking while watching the video

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unit 7: developed and developing economies. lesson objective you should be able to 1.differentiate...

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