Development Development Definition The process of improving the

Development

Development § Definition: § The process of improving the material condition of people through growth and diffusion of technology and knowledge § Every place, regardless of size, exists at some level of development § MDCs § More developed countries § On wealthier side of development spectrum § LDCs § Less developed countries § On the economically poorer side of the development spectrum

Measuring development § There are several ways to measure development § Different factors: § Gross Domestic Product (GDP) § Value of total outputs of goods and services produced in a country, usually over one year § Gross National Product (GNP) § Includes all goods and services owned and produced by a country overseas § Purchasing Power Parity (PPP) § Measurement tool for each currency to buy an equal amount of goods § Allows economists to make “apple to apple” comparisons § Informal Sector § Includes all business transactions that were not reported by the government § Not calculated in GDP § Exists for several reasons

Human Development Index § Formula used to measure a country’s development level and compare it to other regions and countries on the rankordered list of countries § Country’s level of development can be distinguished by three factors: § Economic § Social § Demographic § HDI examines all three factors § HDI created by United Nations § Created by selecting: § One economic factor (Gross Domestic Product) § Two social factors (literacy rate, education) § One demographic factor (life expectancy) § Highest HDI is a 1. 000, or 100% § Lowest score is a 0. 000, or 0%

Map of HDI

Economic Indicator: GDP § Gross Domestic Product per capita § In MDCs GDP per capita exceeds $30, 000 § In LDCs less than $3, 000 § GDP § Definition: § value of the total output of goods and services produced in a country, normally during a year § Divide GDP by total population to get the average contribution from individuals § For example: § The GDP for the U. S. in 2009 was $14 trillion § Divided by pop of 307 million= $46, 600 § The higher the per capita GDP, the greater the potential for ensuring that all citizens enjoy comfortable life § GDP does not perfectly measure country’s development § GDP measures average (or mean) wealth, not its distribution

GDP per Capita

Three other Economic Indicators § The other economic indicators useful in distinguishing between MDCs and LDCs § § § Types of jobs Worker productivity Availability of consumer goods

Types of Jobs § Five categories § Primary § Directly extract resources from earth § Secondary § Manufacturing § Tertiary § Provision of goods and services § Quaternary § Creation and transfer of information § Quinary § Highest level decision making § Distribution of jobs among workers differs greatly between MDCs and LDCs § % of primary jobs in LDCs is 60%, MDCs is less than 5% § High agricultural % means people producing food for mainly survival, not sale

Productivity § Definition: § Value of a particular product compared to the amount of labor needed to make it § Workers in MDCs are more productive than LDCs § Productivity can be measured by the value added per capita § Value added: gross value of the product minus the costs of raw materials and energy § $5, 000 in U. S. , $7, 000 in Japan § $500 in China, $100 in India § MDCs § Workers produce more with less effort due to technology (machines, tools, equipment) § LDCs rely solely on human labor and animal power § Larger per capita GDP in MDCs in part pays for the manufacture and purchase of machinery § Which in turn makes workers more productive and generate more wealth

Consumer Goods § Part of the wealth generated in MDCs is used to purchase goods and services § Especially important are goods and services related to transportation and communications § Including motor vehicles, telephones, and computers § Products that promote better transportation and communications are accessible to virtually all residents in MDCs § Vital to the economy’s function and growth § In LDCs, these products do not play a major role in daily life § LDCs, most people can not afford them § Most people familiar with goods, see them as symbol of development § Possession of consumer goods is not universal in LDCs § “haves” and “have-nots” § Technological change may help to reduce the gap in access to communications betweens MDCs and LDCs § Cell phone ownership rapidly expanding § Don’t require costly investment of installation of wires

Social Indicators of Development § MDCs use part of their wealth to provide schools, hospitals, and welfare services § Result= people are better educated, healthier, and better protected from hardships § Infants more likely to survive, adults live longer § In turn, well-educated, healthy, and secure population can be more economically productive § Social Indicators § Education/ Literacy § Health/ Welfare

Education and Literacy § In general: § Higher the level of development = greater quantity and quality of a country’s education § Quality of education is measured in two ways: § Student/teacher ratio § LDCs more students per teacher § = less personalized instruction § Literacy rate § Percentage of a country’s people who can read and write § 98% + in MDCs, 60% in LDCs

Health and Welfare § People are healthier in MDCs than LDCs § Health influenced by diet § MDCs: § MDCs use part of their wealth to protect people that cannot work § Public assistance for sick, elderly, poor, disabled, orphaned, veterans of war, widows, unemployed, or single parents § eat more calories and protein § LDCs: § receive less than the daily minimum allowance of calories and proteins § MDCs health care is a public service § Available at little to no cost § Government programs pay for more than 70% of healthcare costs in European countries § Exception U. S. where private individuals are required to pay an average of 55% health care costs, more similar to LDCs § Countries in NW Europe provide highest level of public-assistance § Denmark, Norway, Sweden § Today MDCs are having difficulty maintaining these programs

Demographic Indicators of Development § MDCs display demographic differences from LDCs § Demographic Indicators § Used by UN’s HDI: § Life expectancy § Other: § § § Infant mortality rate Natural increase rate Crude birth rates

Demographic Indicators § Life expectancy § Better healthcare and welfare in MDCs permit people to live longer § Babies born today can expect to live into their 60 s in LDCs, 70 s in MDCs § Gap in LE greater for females than males § Females – 13 years longer in MDCs § Males- 10 years longer in MDCs § MDCs have a higher % of older people § = high dependency ratio § Infant Mortality Rate § Better health allows more infants to survive in MDCs § 6% die in LDCs, less than 1% in MDCs § Greater in LDCs because: § Babies die from malnutrition, lack of medical attention, dehydration, poor medical practices § Natural Increase Rate § LDCs having more babies! § Averages 1. 5% in LDCs § Averages 0. 2% in MDCs § Natural increase strains a country’s ability to provide hospitals, schools, jobs, and other services make its people healthier and more productive § LDCs must allocate resources for expanding population rather than improve care for current population § Crude Birth Rate § LDCs have higher NIRs because they have a higher CBR § LDCs= 23 per 1, 000 § MDCs= 12 per 1, 000 § CBR does not indicate a society’s level of development § High # of old people in MDCs

Distribution of MDCs and LDCs § Countries of the world can be categorized into nine major regions according to their level of development § More Developed Regions § § § North America Europe Russia Japan Oceania § Less Developed Regions § § § § Latin America East Asia Southwest Asia/ N. Africa Southeast Asia Central Asia South Asia Sub-Saharan Africa

The Development Gap § Definition: § Widening difference between development levels in MDCs and LDCs § MDCs are improving in their development levels faster than are LDCs § In the last decade, the GDP nearly tripled in MDCs but only doubled in LDCs § The rate of population increase fell by nearly 85% in MDCs, but by less than 5% in LDCs § North-South Gap § Refers to the pattern that MDCs are primarily located in the Northern Hemisphere § LDCs are mainly located in the Southern Hemisphere

Gender Inequality § A country’s overall level of development masks inequalities in the status of men and women § Gender inequality exists in every country of the world § No country in the world where women are treated as well as men § To measure extent of each country’s gender inequality the UN has created two indexes: § Gender-related development index (GDI) § Compares level of women’s development with that of both sexes § Gender Empowerment Measure (GEM) § Compares the ability of women and men to participate in economic and political decision making

Gender-Related Development Index (GDI) § Constructed similar to the HDI § Economic indicators § Per capita female income as a % of per capita male income § Social indicators § # of females enrolled in schools compared to # of males § % of literate females compare to males § Demographic indicators § LE of females compared to males § The GDI penalizes a country for having a large disparity between the well-being men and women § Example: Hungary and Saudi Arabia § A country with complete gender equality would have a GDI of 1. 0 § A high GDI means that both men and women have achieved a high level of development § A low GDI means that women have a low level of development compared to men

Gender Empowerment Measure (GEM) § GEM measures the ability of women to participate in the process o achieving improvements in their status § Political and economic power § GEM is calculated using: § Economic § Per capita female income as a % of per capita male income § % of professional and technical jobs held by women § Political § % of administrative jobs held by women § % of members of the national parliament who are women § Highest score= 1. 0 § Regions with highest GEMs are: § § § North America Northern Europe Oceania § Regions with lowest GEMS are: § Africa § Asia