world economies survey

8/2/2019 World Economies Survey

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Points to highlight in global economic classisification

What is an economic system? The interaction of organizations of

participants engaged, according torules and orders, in the production,distribution, and use of goods andservices

Resource allocation

Forms of ownership Income distribution Role of politics Degree of freedom

infrastructure


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The Three Worlds

Ignored: Cold War putting the international attention towards

the United States and the Soviet Union.

Exploitation: Almost all of them have been part of the colonial

control of a European country.

Despised: Populated by non-European populations.


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The Three Worlds

First World countries Market economies having a high Gross National

Product (GDP) per capita. Generally capitalist democracies having the

United States, Western Europe and Japan asleaders.

US as the pole Second World countries

Centrally planned economies; from socialism to

communism. Average GDP per capita and a well-developed

industrial structure. The USSR as the pole:

Satellite nations in Eastern Europe and allies in Asia,

Africa and Latin America


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The Three Worlds

Third World countries Other nations having diversified political

conditions. Low GPD per capita and a weak, and

sometimes non-existent, industrial structure. Africa, South America and Asia were the stage

of several ideological confrontations betweenthe First and the Second worlds.

Several situations of dependency were createdbetween First World and Third World countries. .


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The Three Worlds

East West

Capitalist economies lead

by the United States

Socialist economies

lead by the USSRNorth

South

Area of conflict between the first and the

second world (Korea, Vietnam, Africa, etc.)

Nonaligned nations


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East / West Division, 1982

Pro USSR

Core USSR ally

URSS

United States

Core USA ally

Pro USA

Non aligned


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The World Bank Classification of Development

A new context Important political and economic changes from

the end of the 1980s. Challenged the conventional economic

classification of development as well as themain poles of the world-system.

Changes from a bipolar organization (East-West) to a multipolar organization.

Tendency toward some homogenization ofpolitical systems The classification now used is based on

economic criteria.


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Income per capita Main classification criteria used by the World

Bank.

The average amount of capital earned byindividuals.

Straightforward relationship between the percapita income and the economic structure of a

nation. The higher it is, the more a population isworking in the industrial and services sectors.


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Income per Capita, 1993

Not available

$8,626 and more

$696-8,625

$695 and less


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Patterns The GDP per capita underlines the important

disparities between countries of the Northand of the South.

Does not well illustrate the developmentpotential of the market:

China has a per capita income slightly over $300 peryear, whereas development opportunities are veryhigh.

Mali has a similar income per capita, but conditionsof the economy are completely different.

Income by capita doesn't necessarily representthe purchasing power:

The higher the purchasing power is, the morean economy is developed.


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Classification ( world bank)

1) Low income economies, China and India,&other low-income nations with-GNP percapita income of between US$ 675 or less,41 nations including Tanzania, Kenya,

Zambia and Malawi. ii) Middle incomeeconomies, lower middle income, GNP percapita of between US$ 676 and US$ 2,695,40 nations including Zimbabwe, Mexico andThailand.

iii) Upper middle income, GNP per capita ofbetween US$ 2,676 and US$ 8,355, 17nations including Brazil, Portugal andGreece.

iv) High income economies, OECD members


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United Nations Classification of Economic

Development

Structure Using several criteria related to income as well

as the structure of the economy and exportsUN classifies as follows

Advanced economies: High income levels.The classifications proposed by the World Bank and

by the United Nations are NEARLY similar.

Newly industrialized economies:

Manufacturing goods represent more than 25% ofthe GDP and 50% of the exportations.

Around 20 countries have experienced a fast andrecent industrial growth.


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United Nations Classification of Economic

Development

Petroleum exporting countries: Drawing a significant portion of their income from

the petroleum industry (notably its exportation). Also defined as rent economies having artificially

high levels of per capita income.

Continent sized countries: India and China. Low income rural societies are dominant. Economic growth is having huge impacts of the

demand a raw materials, goods and services, as well

as over urbanization. Least advanced economies (LAE):

Very low per capita GDP (less than $700), a low levelof industrialization (less than 10% of the GDP) andalphabetization (less than 20% of the population).

They mostly include African countries.


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United Nation Classification of Economic Development

Newly Industrializing

Developing

Underdeveloped

Advanced

Oil Export / Rent

Economies


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Human Development Index

Nature The Human Development Index (HDI) is a

composite indicator developed in 1990 by theUnited Nations Program for Development

(UNPD). More complex and representative measure.

Definition Level of health:

The variable used is the life expectancy at birth. A good health system is likely to improve the lifeexpectancy significantly in a nation.

Level of education:The alphabetization level and the average years of

attending school are the two variables used.


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Global GDP, 2002

32.3%

12.3%

6.1%15.1%

34.2%

United States

Japan

Germany

Other G7

Rest of the world


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Distribution of Global Income Groups, 1990

Inequalities 20% of the worlds

population wascontrolling 85% of theavailable capital in 1995.

This share was 70% inthe 1960s.

1% of the populationcontrols 40% of thecapital.

50% of the globalpopulation live with lessthan $2 a day.

The richest 200people Combined income of 41%

of the global population

(2.46 billions). Net worth of $1,042

3 6

12

1663

1st quintile 2nd quintil

3rd quintile 4th quintile

5th quintile


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Five stages of world economy

Rostow: Whilst economic in nature, Rostow(1971) produced a five stage model ofeconomic takeoff:

Stage 1 traditional society, little increase in

productivity, no modern science applicationsystematically, low level of literacy Stage 2the preconditions of takeoff, moderntechniques in agriculture and production,developments in infrastructure and socialinstitutions

Stage 3 the takeoff, normal growthpatterns, rapid agricultural and industrialmodernisation, good social environment.

Stage 4 the drive to maturity, modern

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