Chapter 20Chapter 20

Economic Growth in Economic Growth in Developing NationsDeveloping Nations

http://www.glencoe.com/video_library/index_with_mods.php?PROGRAM=9780078747663&VIDEO=3955&CHAPTER=19&MODE=2

Developed vs. Developing NationsDeveloped vs. Developing Nations

Developed nations- industrialized nations Developed nations- industrialized nations with a relatively high standard of livingwith a relatively high standard of living

Developing nations- nations with little Developing nations- nations with little industrial development and relatively low industrial development and relatively low standards of livingstandards of living

Standard of living- ability to live Standard of living- ability to live comfortably; based on life expectancy, comfortably; based on life expectancy, infant mortality rate, and literacy rateinfant mortality rate, and literacy rate

Characteristics of Developing Characteristics of Developing NationsNations

Low GDPLow GDP Agricultural economy- subsistence level Agricultural economy- subsistence level

agricultureagriculture Poor health conditionsPoor health conditions High infant mortality rateHigh infant mortality rate Short life expectancyShort life expectancy Low literacy rateLow literacy rate Rapid population growthRapid population growth Weak property rightsWeak property rights

The Process of Economic The Process of Economic DevelopmentDevelopment

Foreign investmentForeign investment Foreign AidForeign Aid

• Economic Economic assistanceassistance

• Technical Technical assistanceassistance

• Military Military assistanceassistance

Reasons for Giving AidReasons for Giving Aid

HumanitarianismHumanitarianism Political AlliancesPolitical Alliances

4 Obstacles to Growth in Foreign 4 Obstacles to Growth in Foreign NationsNations

Attitudes and BeliefsAttitudes and Beliefs Continued rapid population growthContinued rapid population growth Misuse of resourcesMisuse of resources Trade restrictionsTrade restrictions

In 1970, 60% of Indonesians lived below the poverty line. By 1996, that number decreased to 11%. Unfortunately, 1997-98 brought several economic setbacks that brought to light the need for meaningful political and economic change. The new govt. has promised to allow the formation of new political parties, greater freedom of the press, released many political prisoners, and punished high-ranking officers for the kidnapping of activists and other misdeeds. Worker rights are now officially recognized but the enforcement of labor standards remains weak. Why is financial investment more effective in promoting growth in some countries than others? Must a strong govt. that supports human rights be in place before the obstacles to economic growth are removed?

A. People don’t trust innovation and technology; they are comfortable with the old way of doing things

B. The population is growing much faster than the GDP

C. Corrupt governments and poor allocation of resources (capital flight)

D. Trade restrictions in developed nations make it difficult or impossible to increase exports

Which of the four obstacles do you think is the most detrimental to development?

Case Study: Indonesia Indonesia had a large

population and rich natural resources

Received $2 billion in foreign aid, but the economy was still a disaster

The people were divided by ethnicity, religion, and politics

Economy under Sukarno was a disaster

Suharto improved economy, but relied too heavily on oil oil crisis economic crisis

Too much government control over economy

How might things have been different in Indonesia if they had a new leader every 4 to 8 years, rather than 30 years?