Diverse Structures and Common Characteristics

1. Diverse Structures and Common Characteristics Study of Developing Nations

2. Classification of Economies • World Bank classifies 208 economies (population=/> 30,000) based on gross national income per capita, 2000 • LIC =/< $755 • LMC =$756-$2995 • UMC =$2996-$9265 • High- income OECD =/>$9226 • Other high-income countries • Different classification of other-high income countries

3. Classification 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

5. Classification of Economies

6. Classification of Economies

7. Classification of Economies

8. Structural Diversity of Developing Economies • Size (geographical, population) and income of the country • Historical and colonial background • Physical and HR endowments • Ethnic and religious composition • Relative importance of public and private sectors • Nature of its industrial structure • Degree of dependence on external economic and political forces • Distribution of power, institutional and political structures

10. Structural Diversity of Developing Economies: Population and Income

11. Structural Diversity of Developing Economies: Industrial structure

12. Structural Diversity of Developing Economies: Important observations • There is no necessary relation among a country’s size, per capita income, and degree of equality/ inequality • Colonialism exposed African and Asian countries to new forms of potential exploitation and have resulted in different institutional and social patterns • Except for the Persian Gulf oil states, most developing countries have minimal endowments of raw materials and minerals

13. Structural Diversity of Developing Economies: Important observations • Ethnic and religious conflicts have become frequent post cold war. Indigenous populations continue to be discriminated against in Latin American countries. Malaysia and Mauritius are exceptions • Most developing economies have mixed economic systems and the degree of corruption differs widely across countries • Majority of developing countries are agrarian and agriculture is a way of life for the people.

14. Structural Diversity of Developing Economies: Important observations • The various interest and power groups among different segments of the populations in a developing country is a result of their economic, social, and political history • Case Study of Brazil and Costa Rica

15. Common Characteristics of Developing Nations: • Low levels of living and income inequality • Extent of Poverty • Health characterized by high IMRs and malnutrition • Low levels of education and literacy • Low levels of labor productivity • High rates of population growth and dependency burdens • Substantial dependence on agricultural production and primary product exports • Prevalence of Imperfect markets and incomplete information • Dominance, dependence, and vulnerability in international relations

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

17. Income: Comparison of GNP Per Capita

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

19. Distribution of Income

20. Poverty: Share of population living on < $1/ day * Increase in absolute number of people

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

22. Health and Education: Indicators

23. HDI and GDP Ranks

24. HDI variations for similar incomes, 1999

25. Population and Labor Force

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

27. Composition of World Exports (percentages 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