Download Understanding Development: Analyzing Nations with Economic Indicators and HDI - Prof. Ming and more Study notes Economics in PDF only on Docsity! DEVELOPING NATIONS ECON 324V CHAPTER 2 2.1 Defining the Developing World • World Bank Scheme- ranks countries on GNP/capita – LIC, LMC, UMC, high-income OECD and other high- income countries (see Table 2.1) • Developing countries: (p7) • Developed world: western Europe, North America, Japan, Australia, and New Zealand 2.3 Holistic Measures of Living Levels and Capabilities • Human Development Index (HDI) – By the United Nations Development Program – Based on 3 goals or end products of development • Longevity • Knowledge • Standard of living – Development is not just higher income – HDI, when used in conjunction with traditional economic measures of development, increase our understanding of which countries are experiencing development, and which are not – If country ranking did not vary much when the HDI is used instead of GDP per capita, the latter would serve as a reliable proxy for socioeconomics development, no need to worry about health and education indicators. Table 2.4 2009 Human Development Index for 24 Selected Countries (2007 Data) 2.3 continued • Note: – HDI has a strong tendency to rise with per capita income • A wealthier country can invest more in health and education, and this added human capital raises productivity. Positive relationship between GDP per capita and health/education. – But we have many observations that do not follow the above expected pattern • E.g. Costa Rica vs Saudi Arabia • E.g. Nicaragua vs South Africa Figure 2.3 Human Development Disparities within Selected
Countries (continued)
10
Greece Urban
0.9- United Shanghai
Arab
Emirates Rural
3 0.87 Urban Urban
N
= Urban.
a China
07-7
Rural
Gansu
Guizhou
06k India Rural
| Cambodia Rural
Botswana
0.5
(c) Rural-urban differences intensify regional disparities in China.
Source: United Nations Development Programs, Human Development Report, 2006 (New York: Oxford Universily Press,
2006), figs. 10-12. Used by permission.
2.4 Characteristics of the Developing World: Diversity within Commonality 1. Lower levels of living and productivity -- growth rates vary substantially across regions e.g. Sub-Saharan Africa vs East Asia -- One common misperception correlation between country size and economic development (see table) 2. Lower levels of human capital (health, education, skills) (see graphs) 3. Higher Levels of Inequality and Absolute Poverty 4. Higher Population Growth Rates Table 2.7 The 12 Most and Least Populated Countries and Their Per Capita Income, 2008 2.4 Continued 5. Greater Social Fractionalization -- conflict or cooperation 6. Larger Rural Populations but Rapid Rural-to- Urban Migration 7. Lower Levels of Industrialization and Manufactured Exports 8. Adverse Geography – Resource endowments 2.4 Continued 9. Underdeveloped Financial and Other markets – Imperfect markets – Incomplete information 10. Colonial Legacy and External Dependence • Q: To develop, can the currently developing countries follow what the currently developed countries did when they embarked on their era of modern economic growth?
