1 Diverse Structures and Common Characteristics Study of Developing Nations

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Diverse Structures and Diverse Structures and Common Characteristics Common Characteristics

Study of Developing NationsStudy of Developing Nations

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Classification of EconomiesClassification of Economies World Bank classifies 208 economies World Bank classifies 208 economies

(population=/> 30,000) based on (population=/> 30,000) based on gross national income per capita, 2000gross national income per capita, 2000

LICLIC =/< $755=/< $755 LMCLMC =$756-$2995=$756-$2995 UMCUMC =$2996-$9265=$2996-$9265 High- income OECDHigh- income OECD =/>$9226=/>$9226 Other high-income countriesOther high-income countries Different classification of other-high Different classification of other-high

income countries income countries

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Classification of EconomiesClassification of Economies Gross National Income is the total

final output of goods and services produced by the economy, plus net factor income from the rest of the world, minus sales taxes

Gross domestic product (GDP) + net factor payments = Gross national product (GNP)

GNP- sales taxes = Gross national income

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Classification of EconomiesClassification of Economies

East Asia and the East Asia and the Pacific:Pacific:

Korea, RepKorea, Rep

ChinaChina

IndonesiaIndonesia

UMCUMC

LMCLMC

LICLIC

Europe and Central Europe and Central Asia:Asia:

Czech RepublicCzech Republic

LithuaniaLithuania

ArmeniaArmenia

UMCUMC

LMCLMC

LICLIC

Latin America and the Latin America and the Caribbean: Caribbean:

BrazilBrazil

CubaCuba

NicaraguaNicaragua

UMCUMC

LMCLMC

LICLIC

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Middle East and North Middle East and North Africa:Africa:

BahrainBahrain

IraqIraq

Yemen, RepYemen, Rep

UMCUMC

LMCLMC

LICLIC

South Asia:South Asia:

Sri LankaSri Lanka

IndiaIndiaLMCLMC

LICLIC

Sub-Saharan Africa: Sub-Saharan Africa:

South AfricaSouth Africa

NamibiaNamibia

EthiopiaEthiopia

UMCUMC

LMCLMC

LICLIC

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High Income OECD:High Income OECD:

AustraliaAustralia

CanadaCanada

USAUSA

JapanJapan

DenmarkDenmark

FranceFrance

SwitzerlandSwitzerland

UKUK

Other high income countries:Other high income countries:

The BahamasThe Bahamas

KuwaitKuwait

Hong Kong, ChinaHong Kong, China

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Structural Diversity of Developing Structural Diversity of Developing EconomiesEconomies

Size (geographical, population) and income of Size (geographical, population) and income of the country the country

Historical and colonial backgroundHistorical and colonial background Physical and HR endowmentsPhysical and HR endowments Ethnic and religious compositionEthnic and religious composition Relative importance of public and private Relative importance of public and private

sectorssectors Nature of its industrial structureNature of its industrial structure Degree of dependence on external economic Degree of dependence on external economic

and political forcesand political forces Distribution of power, institutional and Distribution of power, institutional and

political structurespolitical structures

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Structural Diversity of Developing Structural Diversity of Developing Economies: Population and Income Economies: Population and Income

Population Population (mill)(mill)

GNP per GNP per capita (USD)capita (USD)

Most PopulousMost Populous

1. China1. China

2. India2. India

3. USA3. USA

10. Japan10. Japan

1,2611,261

1,0161,016

282282

127127

840840

460460

34,26034,260

34,21034,210

Least PopulousLeast Populous

1. St Kitts-Nevis1. St Kitts-Nevis

2. Antigua and Barbuda2. Antigua and Barbuda

3. Dominica3. Dominica

4141

6868

7373

6,6606,660

9,1909,190

3,2603,260

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Structural Diversity of Developing Structural Diversity of Developing Economies: Industrial structureEconomies: Industrial structure

CountryCountry % of L Force% of L Force % of GDP% of GDP

AgricultuAgriculturere

IndustrIndustryy

AgriculturAgriculturee

IndustrIndustryy

NigeriaNigeria 5454 55 4343 2525

BangladeBangladeshsh

6464 1414 3030 1818

BrazilBrazil 3131 2727 1414 3636

All All DevelopinDevelopingg

6060 1717 2020 3838

USAUSA 22 2525 22 2929

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Structural Diversity of Developing Structural Diversity of Developing Economies: Important observationsEconomies: Important observations

There is no necessary relation among a There is no necessary relation among a country’s size, per capita income, and country’s size, per capita income, and degree of equality/ inequalitydegree of equality/ inequality

Colonialism exposed African and Asian Colonialism exposed African and Asian countries to new forms of potential countries to new forms of potential exploitation and have resulted in exploitation and have resulted in different institutional and social patternsdifferent institutional and social patterns

Except for the Persian Gulf oil states, Except for the Persian Gulf oil states, most developing countries have minimal most developing countries have minimal endowments of raw materials and endowments of raw materials and mineralsminerals

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Ethnic and religious conflicts have become Ethnic and religious conflicts have become frequent post cold war. Indigenous frequent post cold war. Indigenous populations continue to be discriminated populations continue to be discriminated against in Latin American countries. against in Latin American countries. Malaysia and Mauritius are exceptionsMalaysia and Mauritius are exceptions

Most developing economies have mixed Most developing economies have mixed economic systems and the degree of economic systems and the degree of corruption differs widely across countriescorruption differs widely across countries

Majority of developing countries are Majority of developing countries are agrarian and agriculture is a way of life for agrarian and agriculture is a way of life for the people. the people.

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The various interest and power groups The various interest and power groups among different segments of the among different segments of the populations in a developing country is a populations in a developing country is a result of their economic, social, and result of their economic, social, and political historypolitical history

Case Study of Brazil and Costa RicaCase Study of Brazil and Costa Rica

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Common Characteristics of Developing Common Characteristics of Developing Nations:Nations:

Low levels of living and income inequalityLow levels of living and income inequality Extent of PovertyExtent of Poverty Health characterized by high IMRs and Health characterized by high IMRs and

malnutritionmalnutrition Low levels of education and literacyLow levels of education and literacy Low levels of labor productivityLow levels of labor productivity High rates of population growth and dependency High rates of population growth and dependency

burdensburdens Substantial dependence on agricultural production Substantial dependence on agricultural production

and primary product exportsand primary product exports Prevalence of Imperfect markets and incomplete Prevalence of Imperfect markets and incomplete

informationinformation Dominance, dependence, and vulnerability in Dominance, dependence, and vulnerability in

international relationsinternational relations

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Income inequality:Income inequality: Per Capita Gross National Per Capita Gross National Product in Selected Countries, 1997 (in U.S. dollars Product in Selected Countries, 1997 (in U.S. dollars at official exchange rates)at official exchange rates)

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Income:Income: Comparison of GNP Per Capita Comparison of GNP Per Capita GNP Per Capita (US $)GNP Per Capita (US $)

CountryCountry Exchange rateExchange rate PPPPPP

UKUK 24,50024,500 23,55023,550

USAUSA 34,26034,260 34,26034,260

ZimbabweZimbabwe 480480 2,5902,590

BangladeshBangladesh 380380 1,6501,650

ChinaChina 840840 3,9403,940

IndiaIndia 460460 2,3902,390

Sri LankaSri Lanka 870870 3,4703,470

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Income gapsIncome gaps: growth rates of real : growth rates of real GNP per capita GNP per capita (avg annual growth) (avg annual growth)

CountryCountry 1980-901980-90 1990-20001990-2000

Africa:Africa:

KenyaKenya

NigeriaNigeria0.30.3

-3.0-3.0-0.3-0.3

-0.4-0.4

Asia:Asia:

IndiaIndia

South KoreaSouth Korea3.23.2

8.98.94.24.2

4.74.7

Latin America:Latin America:

BrazilBrazil

MexicoMexico0.60.6

-0.9-0.91.51.5

1.51.5

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Distribution of IncomeDistribution of Income

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PovertyPoverty: Share of population living on < $1/ day: Share of population living on < $1/ day

RegionRegion 19901990 19981998

East Asia and PacificEast Asia and Pacific 27.627.6 15.315.3

Europe and Central Europe and Central AsiaAsia

1.61.6 5.15.1

Latin America and the Latin America and the Caribbean*Caribbean*

16.816.8 15.615.6

Middle East and N. Middle East and N. AfricaAfrica

2.42.4 1.91.9

South Asia*South Asia* 4444 4040

Sub-Saharan Africa*Sub-Saharan Africa* 47.747.7 46.346.3

TotalTotal 2929 2424* Increase in absolute number of people

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Health:Health: Infant Mortality Rates in Selected Infant Mortality Rates in Selected Countries, 1998 (per 1,00 live births)Countries, 1998 (per 1,00 live births)

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Health and Education: Health and Education: IndicatorsIndicators

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HDI and GDP RanksHDI and GDP Ranks

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HDI variations for similar incomes, HDI variations for similar incomes, 19991999

CountryCountry HDIHDI HDI rankHDI rank

GNP per cap~ PPP GNP per cap~ PPP $1000$1000

KenyaKenya

UgandaUganda

0.5140.514

0.4350.435123123

141141


VietnamVietnam

PakistanPakistan

0.6820.682

0.4980.498101101

127127


Sri LankaSri Lanka

IndonesiaIndonesia

0.7350.735

0.6770.6778181

102102

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Population and Labor ForcePopulation and Labor Force

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Composition of World Exports (percentages Composition of World Exports (percentages of primary and manufactured products)of primary and manufactured products)

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Composition of World Exports (percentages Composition of World Exports (percentages of primary and manufactured products)of primary and manufactured products)

Markets are imperfect in developing countries due to: Economies of scale Thin markets for many products due to

limited

demand Widespread externalities (good and bad) Prevalence of common property resources Incomplete information Information is costly to obtain

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1 Diverse Structures and Common Characteristics Study of Developing Nations