Transcript (GDP) Per Capita

Development
Key Issue 1: Why Does
Development Vary Among Countries?
Created by the United Nations
Recognizes that a country’s level of
development is a function of economic,
social, and demographic factors
 Economic Factor = GDP per capita
 Social Factors = literacy rate and amount
of education
 Demographic factor = life expectancy
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Human Development Index (HDI)
Highest possible = 1.0 (100%)
Highest – Norway .963 in 2005
Lowest – Niger .281 in 2005
The U.S. has never been first, but is
usually in the top dozen
 The lowest dozen are usually in subSaharan Africa
 HDI rankings
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HDI rankings
GDP per capita
 Types of jobs
 Productivity
 Raw materials
 Consumer goods

Economic Indicators of
Development
On average, workers in PED countries
make $15/hour compared to $2/hour in
PINGs
 PEDs usually mandate a minimum wage
 Gross Domestic Product – the value of
the total output of goods and services
produced in a country
 GDP divided by population measures
the amount that an individual makes
toward generating a country’s wealth in
a year

Gross Domestic Product (GDP) Per
Capita
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Gross National Product (GNP) –
similar to GDP, but it includes income
people earn abroad
Annual GDP per capita average
(2005):
$27,000 in PEDs
$4,000 in PINGs
The Gap is widening!
Also, per capita GDP measures
average wealth, not distribution
GDP Per Capita cont…
Primary – agriculture, extract materials
directly from the earth (fishing,
mining,etc…)
 Secondary – manufacturers that
transform raw materials into useful
products
 Tertiary – involves the provision of goods
and services to people in exchange for
payment (education, government)

Types of Jobs
The distribution of the types of jobs
varies between PEDs and PINGs

Agriculture:
◦ At least 60% of people in PINGs work
in agriculture
◦ The high number means that most
are subsistence farmers
◦ Only 5% in PEDs

Within PEDs, the primary and
secondary sectors have
decreased, while tertiary has
increased
Productivity = the value of a particular
product compared to the amount of labor
needed to make it
 Productivity can be measured by the
value added per worker
 In manufacturing, P = the value of the
product – the costs raw materials and
energy

Productivity

The value added per manufacturing
worker:
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$80,000 in the U.S.
$70,000 in Japan
$1000 in China
$500 in India
Why the differences?
◦ Workers in PEDs are more productive than in
PINGs because workers in PEDs have access
to more machines and equipment and are
therefore able to produce more with less
effort.
Productivity cont…
Raw materials and energy sources are
essential to development!
 The U.S. and USSR had them in the Cold
War
 In the 19th century, European countries
established colonies as they ran short of
raw materials at home

Raw Materials
Part of the wealth generated in PEDs
goes towards buying essentials (food,
clothing, shelter)
 The rest of our wealth goes towards
consumer goods and services (cars,
phones, entertainment, computers)
 The wealth spent on nonessentials
helps to expand manufacturing and
wealth in the country

Consumer Goods
Cars per 1000 people (2002)
Where did Africa go?
Three particular items: motor vehicles,
telephones, and TV sets
 In PEDs, the ratio is approaching 1:1 (one
car per person, etc…)
 In PINGs, these products do not play a
role in the daily lives of most people

Consumer Goods as a Measure of
Development
PEDs – wealth is used for schools,
hospitals, and welfare services
 This means that the people are better
educated, healthier, and more prepared
for hardships
 What does this mean for the economy?

◦ The population can be even more economically
productive
Social Indicators of Development
The higher level of Development: the
better the quantity and quality of
education
 One measure: The number of school
years attended

◦ PEDs – about 10 years
◦ PINGs – a couple of years

The measure of the quality of education
◦ Student teacher ratio
◦ Literacy rate
Education and Literacy
When people get sick – PEDs have the
wealth and resources to care for them
 In many PEDs, health care is a public
service
 Also, PEDs often care for people who are
unable to work

Health and Welfare
Life Expectancy
 Infant Mortality Rate
 Natural Increase Rate
 Crude Birth Rate

Demographic Indicators of
Development
Life expectancy = the number of years a
newborn infant can expect to live at
current mortality levels
 In PEDs, life expectancy is in the mid-70s
 In PINGs, life expectancy is in the mid40s

Life Expectancy
Infant mortality rate = the death rate
during the first year of life
 In PEDs, 99.5% live
 In PINGs, 94% live
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◦ Babies die from malnutrition, lack of medicine,
or poor medical practices resulting from a lack
of education
Infant Mortality Rate
NIR = averages 1.5% in PINGs
 NIR = less than .1% in PEDs
 Higher NIR strains a country’s ability to
provide schools, hospitals, jobs, and other
services

Natural Increase Rate
Natural Increase Rate
PINGs have higher NIR because they have
higher crude birth rates
 Women in PEDs choose to have fewer
children for economic and social reasons,
and they have access to birth control

Crude Birth Rate