Chapter 9, Development

Rubenstein
Key Issue #1: Where are more and less developed countries (MDCs and
LDCs) distributed?
1. Development is the process of improving the material conditions
of people through diffusion of no!ledge and technolog"
#$ Development is a continuous process
%$ &eographicall", most MDCs lie north of the '() parallel
and the LDCs south of that line
C$ *uman Development +nde, (*D+) created b" the -).
/)$ Countr"0s level of development is a function of ' factors.
a)$ economic 1 gross domestic product2capita
(&D32capita)
b)$ social 1 literac" rate and amount of education
c)$ demographic 1 life e,pectanc"
4)$ +n /995, Canada had the !orld0s highest *D+
')$ -6# is usuall" in top 7, but has never been first
8)$ Lo!est *D+ in /997 !as 6ierra Leone (#frica)
9)$ /9 of the countries !ith the lo!est *D+s are in #frica
4$ )ine ma:or cultural regions and 4 other ;areas< in the !orld
#$ =f these, ' are more developed.
/)$ #nglo>#merica (Canada and -6#) > *D+ of $99
4)$ Western ?urope 1 *D+ of $9'
')$ ?astern ?urope 1 *D+ of $5@
%$ =f these, 4 ;areas< are also !ell developed.
/)$ Aapan 1 *D+ of $98
4)$ 6outh 3acific (#ustralia, )e! Bealand, and 3apua, )e!
&uinea 1 *D+ of $9'
C$ =f these, 7 are less developed.
/)$ Latin #merica 1 *D+ of $@
4)$ 6outheast #sia 1 *D+ of $75 (+ndonesia, Chailand, etc$)
')$ Middle ?ast 1 *D+ of $77
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8)$ ?ast #sia 1 *D+ (f $7' (China)
9)$ 6outh #sia 1 *D+ of $88 (+ndia, %angladesh, 3aistan,
etc$)
7)$6ub>6aharan #frica 1 *D+ of $'9
Key Issue # 2: Wh" does development var" among countries?
'$ Recall the ' !a"s development is measured. (economic, social,
and demographic)
8$ ?conomic indicators.
#$ &D3 in MDCs is usuall" much higher because incomes are
much higher
%$ #verage &D3 in MDCs is D4(,(((2person !hile onl"
D/(((2person
C$ C"pes of :obs in MDCs.
/)$ 3rimar" 1 !oring directl" !ith land 1 agriculture,
mining, fishing, forestr"
4)$ 6econdar" > manufacturing
')$ Certiar" 1 provides goods and services
8)$ Euaternar" 1 boo sa"s this categor" is no longer used,
but it !as2is information
9)$ Euinar" 1 boo sa"s this obsolete also, but !as2is
managers of information
7)$ =f interest, Fuaternar" sector !as2is fastest gro!ing
sector in !orld
D$ 3roductivit"
/)$ *o! much each !orer produces
4)$ +n MDCs higher level of technolog" !hich helps
productivit"
')$ Value added is the value added per !orer and is a
measure of productivit"
a)$ +n manufacturing, value added is gross value of the
product minus cost of ra! materials and energ"
b)$ Galue added in MDCs usuall" '( times that of
LDCs
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8)$ Ra! materials 1 MDCs usuall" have better access to
large supplies of ra! materials and energ"
a)$ 6ome MDCs do not have access to large Fuantities
of ra! materials, "et have managed to become productive 1
e$g$ Aapan
9)$ *igher consumption of consumer goods in MDCs due to
higher incomes
9$ 6ocial +ndicators
#$ ?ducation 1 measured in 4 !a"s.
/)$ Ceacher>student ratio 1 higher in MDCs
4)$ Literac" rate 1 ho! man" can read and !rite
')$ #verage student in school /( "ears in MDCH a couple of
"ears in LDCs
8)$ Women more liel" to attend school in MDCs than in
LDCs
%$ *ealth care much better in MDCs also
C$ 3ublic assistance 1 MDCs tae better care of those !ho are
not able to !or (sic, elderl", poor, disabled, etc$)
/)$ Countries in )orth!estern ?urope usuall" provide
highest level of public assistance (Denmar, )or!a", and
6!eden)
7$ Demographic indicators
#$ Life e,pectanc" 1 in general, MDC females live /' "ears
longer than LDC femalesH MDC males live 9 "ears longer
than LDC males
%$ +nfant mortalit" rate 1 /(2/((( per "ear in man" MDCsH
/((2/((( in LDCs
C$ Rate of natural increase 1 averages greater than 4I in
LDCsH less than /I in MDCs
D$ Crude birth rate 1 averages 8(2/((( in LDCsH /92/((( in
MDCs
Key Issue #3: Wh" do less developed countries face obstacles to
development?
5$ Che" face obstacles for all of the above reasons$
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@$ *o! can LDCs promote development?
/)$ LDCs need to increase &D32capita and use additional funds to
improve social and economic conditions of people
4)$ C!o fundamental Fuestions in tr"ing to encourage
development.
a)$ What are best policies to produce development?
b)$ *o! can development be financed?
')$ C!o !a"s to do this.
a)$ +nternational trade
b)$ 6elf>sufficienc"
8)$ +nternational trade.
a)$ Countries identif" its uniFue economic assets and
determine !hat others are !illing to bu"
b)$ Countries must identif" !hat it can manufacture and
distribute at a higher Fualit" and cheaper cost than another countr"
c)$ Rosto!0s Development Model of 6ociet"
/)$ 3roposed in /99(s
4)$ Development of a societ" should proceed as follo!s.
')$ 6tage /. Craditional societ" 1 man" engaged in
agriculture and a high percentage of countr"0s natural
!ealth allocated to ;non>productive< societal segments such
as the militar" and religious causes
8)$ 6tate 4. 3re>conditions for ;tae>off< 1 #n elite, !ell
educated group initiates innovative economic activities and
countr" begins to invest in technolog" and infrastructure
9)$ 6tage '. Che ;tae>off< 1 Je! industries such as
te,tiles or food products ;tae>off<
7)$ 6tage 8. Che drive to maturit" 1 Modern technolog"
diffuses to man" !orers and !orers become more silled
5)$ 6tage 9. #ge of mass consumption 1 +ndustr" shifts
to consumer goods
d)$ +f countries go through the Rosto! stages, then the
economic ;tricle do!n< effect aids others in the countr"
e)$ Countries that have taen the +nternational Crade
approach include.
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/)$ 6audi #rabia, Ku!ait, %ahrain, =man, and -nited #rab
?mirates 1 all petroleum e,porting countries
4)$ Chese countries have Western consumer goods, but
culture changes more slo!l" (e$g$ 1 +ran)
9)$ 6elf>sufficienc"
a)$ Countr" should spread investments throughout economic
sectors and encourage producing goods for people in countr"
b)$ +mports should be limited through ta,es, or limiting
number of imports allo!ed, or b" licensing
c)$ ?$&$ is +ndia, but population is gro!ing so rapidl", this is
difficult$
d)$ 3roblems !ith this approach.
/)$ +nefficient domestic maret 1 too small to mae a
profit
4)$ Companies feel the" are protected from
competition, so don0t eep pace !ith technolog"
')$ Large, often corrupt bureaucracies lead to illegal
activities
e)$ 3roposed solution. World %an, etc$ lend mone" to LDCs
to develop h"droelectric po!er, flood protection, etc$ +f countries
defaults, progress is halted$ 1 i$e$ 1 loan mone" on something tangible
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