Download - Growth and the Less-Developed Countries
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Growth and the Less-Developed
Countries
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What is one way to compare the well-being
of one country to another?
GDP per capita
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What is GDP per capita?
The value of final goods produced
(GDP) divided by the total population
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita
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What are industrially advanced countries
(IACs)?High-income nations
that have market economies with technologically
advanced capital and well-educated laborAKA – MDCs (Most
Developed Countries)
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Who are the advanced countries?
http://en.wikipedia.org/wiki/Developed_country
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What are less-developed countries
(LDCs) ?Economies based on agriculture which are
lacking in technology,
advanced capital and well-educated labor
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Developed and Developing Countries
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Who are the LDCs?
Most countries of Africa, Asia, and Latin America
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Who is a problem?LDC’s per capita is subject to greater
measurement errors than for IAC’s
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What are problems in comparing GDP
per capita?•measurement errors•income distribution•fluctuations in exchange rates
•differences in living standards
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Is GDP per capita correlated with other
measures of quality of life?
Yes
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What are quality of life indicators?
•life expectancy•adult literacy•daily calorie supply•energy consumption per capita
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Latin Am & Caribbean
S. AsiaMiddle East & N. America
Sub-Saharan
Africa
Europe & Central Asia
East Asia & Pacific
IAC’s
$34,799
$3,810$3,666 $1,823
$1,080 $721 $629
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What factors come together to produce a
country’s growth?•natural resources•investment in capital•investment in human capital (education & job training)
•low population growth•infrastructure
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What is infrastructure?Capital goods
usually provided by the government,
including highways, bridges, waste and water systems, and
airports
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What is a major problem for LDCs?
They find themselves in a vicious cycle of
poverty
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What is the vicious circle of poverty?The trap in which countries are poor
because they cannot afford to save and
invest, but they cannot save and invest
because they are poor
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What are the political factors favorable for economic growth?
•Gov’t stability (law and order)
•infrastructure•international trade
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Economic growth and development
Natural resources
endowment
Human resources
development
Capital investment
Technological progress
Political environment
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What is foreign aid?The transfer of money or resources from one
government to another for which no
repayment is required
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In fiscal year 2011, the U.S. government allocated the following
amounts for aid:
• Total economic and military assistance: $49.5 B ($52.7 B in 2010)– Total military assistance: $17.8 B ($15 B)
– Total eco. assist: $37.7 B ($37.7 B)• of which, USAID assist: $14.1 B ($14.1 B)
http://en.wikipedia.org/wiki/United_States_foreign_aid
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What is the Agency for International
Development?
AID is the agency of the U.S. State Department that
is in charge of U.S. aid to
foreign countries
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What is the World Bank?The lending agency that makes long-
term low-interest loans and provides
technical assistance to
less-developed countries
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What is the International Monetary Fund (IMF)?
The lending agency that makes short-
term conditional low-interest
loans to developing countries
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What is the New International Economic Order (NIEO)?
A series of proposals made by LDCs in 1974,
calling for changes that
would accelerate the economic growth and
development of the LDCs
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What is a conclusion?
There is no single strategy for
economic growth and
development
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