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- Fact or illusion?
Presented by –
Devriti Rajya Laxmi Rana
Arpit bansal
Megha Gandotra
Aradhana Dogra
Harleen Kalra
Varun Pratap Singh
Developing Countries
Definition
A Developing country is a term that describes a nation that has a low level of material well-being. The levels of
development vary widely within so-called developing countries. Some developing countries have high average standards of
living compared to others.
IMF and World Bank classify countries, under this category, based on their different criteria's. For Example, The IMF uses a
flexible classification system that considers -
Characteristics
Developing economies have certain characteristics that separate them from least developed countries and developed
countries. Lets take a look at some of these characteristics -
Almost all developing countries are poor in money terms. But they are diverse in culture, economic conditions and
social and political structures.
Based on these certain characteristics, the following are a few
developing countries that we will look at in depth –
India
China
Brazil
Russia
Thailand
South Africa
Are Developing Nations really Developing?
Looking at the growth of developing countries, it is hard to
refuse the fact that these countries are really developing.
High GDP growth, high literacy figures, stable political
structures and a few other factors are helping them to a fast
growing economy.
They are also contributing higher to the global economy
compared to the developed countries and according to the
IMF and the World Bank, by 2025, the world will have a new
Superpower, India, that is a developing nation.
The trade surpluses and increased level of power in the
global trade is also adding to their overall development.
China and India together
Developing Nations are “not” developing
Due to the recent global economic recession and stock
markets plunging everywhere in the world, these developing
nations are facing severe growth issues and thus producing
a hinder to their development.
Dependence mainly on agricultural activities, is another
reason for their slow or insignificant development as most of
these countries depend on agriculture as the country’s main
activity, rather than focusing on industrial and agricultural
activities together.
High population growth rate also dampens the
development as it is hard for a country to cater to a growing
amount of people with limited resources, which have not
been fully exploited.
India
60 years since freedom, India is still being called a developing country.
The Indian financial system, till the early 90`s, was a closed system with its main
characteristics being –
an administered structure of restrictive acts,
interest rates,
restrictions on all market participants--including banks, FI (Financial Institutions) & corporate.
FOREX markets were fully controlled with a very few opportunities
The overall economic and monetary system was very weak with fiscal deficit circles emerging year on
year.
After 1991 the economic reforms took place and emphasis was laid down on decontrolling of the
financial sector and markets.
FOREX policies were liberalised;
FERA and MTRP restrictions were also reduced.
Steps were taken to open the economy by making imports simpler and promoting exports.
The government and regulatory bodies laid down the short term objective of creating liquidity and
providing incentives to promote immediate financial injection in the dead system.
India
1991 and Current
Before
5.3 7.2
GDP Growth Rate (%)
Rate(%)
7.8 8.9
GDP Growth Rate (%)
Rate(%)
In China, 150 million people, equivalent to the total Russian population, are caught in poverty according to the
UN standard, living on less than 1 US dollar a day.
China is still at the lower end of the global industrial chain. Their trade mix is dominated by commodity trade
that is resource and labour consuming. Due to the modest production level and dependence on conventional
industries with low added value, the energy intensity of China’s GDP is much higher than the world’s average,
let alone that of the developed countries.
China’s shortfalls in scientific and technological innovation capacity hinder their core-competitiveness. Across
China, industrial structure and the development between urban and rural areas and among different regions
remain quite unbalanced. Apart from these, they are also faced with challenges such as lack of investment in
education, medical services, and social security.
China is a “rising & developing” country. Both 'rising' and 'developing' are an ongoing process, suggesting that
the development of China is not a one off task.
Their remarkable achievements in economic and social development have not changed the fact that they are still
a developing country. And being a developing country provides them with time, room and potential for further
growth.
Brazil
Until 1974 Brazil's GDP was among the highest in world ranking , 7.4%. But Brazil was
absorbed into excessive liquidity from Japanese, European and U.S. Banks in the 1970s.
Between the 1970s and1980s, Brazil had an impressive GDP of 8.5%.The per capita
income increased to US $ 2,000 in 1980.
Several steps were taken by the government to minimize the impact of the crisis of 2008
and 2009,
1. injecting more than U.S. $100 billion of additional liquidity into the economy
2.providing tax cuts to manufacturers and consumers, and reducing Central Bank
interest rates.
The country has invaluable natural resources, which benefits the economy, especially
with the commodities and bio-fuels markets’ boom.
Recently, in the Tupi Oil Exploration (Santos Basin), new oil reserves were found,
allowing the Brazilian oil reserves to grow from 13 b.b. to 20 billion b.b..
The Real Estate sector is one of the most atractive ones in the whole economy, with
growth rates of at least 20% at a national level.
Recently, Brazil has achieved the Investment Grade classification by S&P and Fitch, and
its currency has beaten a 9 year maximum facing the US Dollar.
• Brazil is the world's tenth largest economy at market exchange rates.
• The country has been expanding its presence in international financial and commodities
markets.
• The biggest investment boom in history was in 2007 when Brazil launched a four-year
plan to spend $300 billion to modernize its road network, power plants and ports.
Brazil
2000 Current
4.3 7.6
GDP Growth Rate (%)
Rate(%)
• One of the issues the Brazilian central bank is currently dealing with is the excess of
speculative short-term capital inflows to the country in the past few months, which
might explain in part the recent downfall of the U.S. dollar against the real in the period.
3.4 4.6
GDP Growth Rate (%)
Rate(%)
5.0 2.6
GDP Growth Rate (%)
Rate(%)