Transcript Key Issue #1: Why Does Development Vary Among

Unit 6: Development
Ch. 9 Development
Development
• Regional separation between division of
wealthy & poor countries
• Development – process of improving the
material conditions of people through
diffusion of knowledge & technology
• MDC vs. LDC
• MDC = more developed, relatively developed,
developed
• LDC = less developed, developing
Key Issue #1: Why Does Development
Vary Among Countries?
• 3 factors in a country’s development level:
① Economic
② Social
③ Demographic
• Human Development Index (HDI)
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UN figure used since 1990
Selects 4 factors (1 economic, 2 social, 1 demographic)
Highest possible score is 1.0 (100%)
Highest in 2013 – Norway (0.944)
Highest regions – Western Europe, U.S. & Canada
Lowest in 2013 – Niger (0.337)
Lowest Regions – Sub-Saharan Africa
U.S. was #5 in 2014; was #10 in 2005 (lower in education due to high
HS drop out rates & lower in life expectancy due to inadequate health
care for low income)
Key Issue #1: Why Does Development Vary
Among Countries?
• Economic Indicators of Development
– Before 2010, Gross Domestic Product (GDP) per capita was used in HDI
– Now, Gross National Income (GNI) is used – adds economic output of
foreign residents minus income of non-resident citizens/businesses;
adjusted for Purchasing Power Parity (PPP)
– GDP per capita
• Hard to determine average income
• Average income in MDC ($15 per hour) vs. LDC ($2 per hour)
• GDP – value of the total output of goods & services produced in a country
(restricted to territory of country)
• Gross National Product (GNP) – value of the total output of goods & services
produced by individuals & businesses of a country (ownership, not location);
not viewed as being as useful of a comparison as GDP
– PPP – used to adjust GDP or GNI or GNP based on exchange rates &
inflation; reflects transaction values for traded goods only (GDP includes
non-traded goods)
– Traded goods – good or service that can be sold in a location different
that where it was produced (non-traded goods: haircuts, massages,
prepared food, construction, etc.)
Key Issue #1: Why Does Development
Vary Among Countries?
• Economic Indicators of Development
– GDP Per Capita
• Total GDP / population = GDP per capita
• Ex. U.S. - $16.8 trillion GDP / 319 million people = approx. $53,000
GDP per capita
• MDC vs. LDC in 2005 - $27,000 vs. $4,000
• Range: over 100,000 in Liechtenstein, Luxembourg, Monaco, &
Norway to 229 in Burundi per UN in 2013
• In 2005, below $1,000 in 15 African countries & 3 Asian countries
• Growth in LDCs avg. GDP per capita 1990-2005 ($800 to $4,400);
increase of 450%; rapid growth in China, modest growth in Africa
• MDCs saw a 55% increase 1990-2005 (grew by $10,000)
• GDP is not a perfect measure – few starving in LDCs, 1/8 of U.S. in
poverty (1/4 of African Americans & 1/5 of Hispanics)
• GDP per capita measures average/mean wealth not its distribution
Key Issue #1: Why Does Development Vary
Among Countries?
• Economic Indicators of Development
– Types of Jobs
• Categories:
① Primary – direct use of raw materials (farming, timber, fishing,
mining)
② Secondary – manufacture of raw materials
③ Tertiary – provision (selling) of goods & services
④ Quaternary – business services (trade, insurance, banking,
advertising)
⑤ Quinary – usually information & data-driven; health, education,
research, gov’t, tourism, recreation
• Some consider tertiary to include quaternary & quinary
• LDCs – 60% of pop. in primary sector; MDCs – 5% in primary sector
• Most people in LDCs spend effort/time on food for survival; MDCs need
very few farmers to produce enough food for entire pop. (more people
can work in secondary & tertiary+ jobs to increase country’s wealth)
• Decline in primary & secondary jobs in MDCs also because of global
competition for industry (service sector growing in MDCs due to
increasing demand)
Key Issue #1: Why Does Development Vary
Among Countries?
• Economic Indicators of Development
– Productivity
• Productivity = value of a product compared to amount of labor required
(higher in MDCs)
• Value added = gross value of product – cost of raw materials & energy
– $80,000 in U.S. & $70,000 in Japan vs. $1,000 in China & $500 in India
• Less effort in MDCs & more efficient due to machinery, tools, equipment
• LDCs require more human & animal power
– Raw Materials
• U.S. & Russia are very rich in raw materials (amount & variety)
• U.K. became 1st developed country due to coal & iron in late 1700s
(Industrial Rev.)
• Europe began to import raw materials once they ran out locally
(imperialism & colonialism)
• Some LDCs gaining wealth through oil or other energy resources
• Demand for some raw materials has declined (cotton, copper)
• As demand falls, prices fall
• Countries without resources are able to develop through trade (Japan,
Singapore, Switzerland, South Korea)
Key Issue #1: Why Does Development Vary
Among Countries?
• Economic Indicators of Development
– Consumer Goods
• Most important are transportation & communication (motor
vehicles, telephones, computers, Internet etc.)
• Cars, computers, & phones are not as important in LDCs –
workers often live in small, rural areas in low-tech jobs
• MDCs: 500 land-line phones per 1,000 people; 400 motor
vehicles per 1,000; 300 Internet users per 1,000
• LDCs: less than 100 per 1,000 for all 3
– Most familiar with the goods, but cannot afford
– Large gap between haves (gov’t, elite, business owners) & have-nots;
wealthy are usually in cities
– Income gap may lead to social/political unrest
– Goods contribute to increased leisure time & cultural diversity
– Goods also reduce gap to communication between LDCs & MDCs
Key Issue #1: Why Does Development
Vary Among Countries?
• Social Indicators of Development
– MDCs are typically better educated, healthier, & better protected
from hardships; infants more likely to survive; people can be more
economically productive
– Education & Literacy
• UN used literacy rate & average years of schooling until 2010 for the HDI
• Currently, the UN uses average years of schooling & expected years of
schooling for the HDI
• Quantity of education – avg. # of years attending school
• Quality of education – student-teacher ratio & literacy rate
• Years of schooling: 10 years on avg. in MDCs vs. 2 years in LDCs
• 2x higher student-teacher ratio in MDCs
• MDCs have more books, newspapers, & magazines (LDCs often have to
learn from textbooks from MDCs & in a different language)
• Literacy rate – over 98% in most MDCs; less than 60% in most LDCs
• LDCs spend less per pupil but often a higher % of their GDP
Key Issue #1: Why Does Development
Vary Among Countries?
• Social Indicators of Development
– Health & Welfare
• MDCs spend higher % of GDP on healthcare
• Influenced by diet – MDCs consume more calories & proteins per day
than LDCs (MDCs often more than needed, LDCs often less than
needed/malnutrition)
• Health care often free or low cost public service in MDCs (70% paid by
gov’t in Europe)
• Over 50% paid by individual in LDCs (and in U.S.)
• Welfare – income protects those who cannot or do not work (sick,
poor, elderly, orphaned, veterans, widows, unemployed, single
parents); highest in N & W Europe
• Sweden, Norway, & Denmark spend most as % on welfare
• Economic slowdown affects MDCs’ ability to provide high level of
public assistance
• Affordable Care Act (Obamacare) – attempt by U.S. to bring its health
care coverage more in line with other MDCs
Key Issue #1: Why Does Development Vary
Among Countries?
• Demographic Indicators of Development
– Life Expectancy (used by UN for HDI calculation)
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Avg. of 60s in LDCs; Avg. of 70s in MDCs
Gender gap: males 10 years longer in MDCs; females 13 years longer in MDCs
More elderly in MDCs, lower % of under-15 (dependency ratio)
6x more young people in LDCs than old people (practically even in MDCs)
– Infant Mortality Rate (IMR)
• LDCs – 6% on avg. (malnutrition, lack of medicine, dehydration from diarrhea,
poor medical practices during pregnancy & birth, lack of education) vs. MDCs –
0.5% on avg.
– Natural Increase Rate (NIR or RNI)
• Higher in LDCs – strains provision of services (schools, hospitals, jobs, housing,
etc.)
• 15 per 1,000 (1.5%) per year in LDCs vs. 1per 1,000 per year in MDCs (0.1%)
– Crude Birth Rate (CBR)
• Higher in LDCs – 24 per 1,000 vs. 11 per 1,000 in MDCs
• MDCs – economic & social reasons for fewer children; access to birth control
• CDR does not affect development; slightly lower in several LDCs than MDCs
(aging pop.)
List of selected countries (2014 data)
Country
GDP per capita
in U.S. dollars
GDP per capita (PPP adjusted) in
Geary-Khamis dollars or
International dollars
GNI per capita
(PPP adjusted)
Luxembourg
103,187
97,639
59,750
Qatar
78,829
137,162
123,860
U.S.
55,904
54,370
53,960
Singapore
53,224
83,066
76,850
U.K.
44,118
39,826
35,760
Japan
32,481
37,519
37,630
Greece
17,657
25,954
25,630
Argentina
13,428
22,302
N/A
World
10,023
14,982
14,931
China
8,280
13,224
11,850
Algeria
4,345
13,888
12,990
Indonesia
3,412
10,651
9,260
Bangladesh
1,266
3,391
2,810