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Development

Development. Key Issue 1: Why Does Development Vary Among Countries?. Created by the United Nations Recognizes that a country’s level of development is a function of economic, social, and demographic factors Economic Factor = GDP per capita

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Development

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  1. Development Key Issue 1: Why Does Development Vary Among Countries?

  2. Created by the United Nations • Recognizes that a country’s level of development is a function of economic, social, and demographic factors • Economic Factor = GDP per capita • Social Factors = literacy rate and amount of education • Demographic factor = life expectancy Human Development Index (HDI)

  3. Highest possible = 1.0 (100%) • Highest – Norway .963 in 2005 • Lowest – Niger .281 in 2005 • The U.S. has never been first, but is usually in the top dozen • The lowest dozen are usually in sub-Saharan Africa • HDI rankings HDI rankings

  4. GDP per capita • Types of jobs • Productivity • Raw materials • Consumer goods Economic Indicators of Development

  5. On average, workers in PED countries make $15/hour compared to $2/hour in PINGs • PEDs usually mandate a minimum wage • Gross Domestic Product – the value of the total output of goods and services produced in a country • GDP divided by population measures the amount that an individual makes toward generating a country’s wealth in a year Gross Domestic Product (GDP) Per Capita

  6. Gross National Product (GNP) – similar to GDP, but it includes income people earn abroad • Annual GDP per capita average (2005): • $27,000 in PEDs • $4,000 in PINGs • The Gap is widening! • Also, per capita GDP measures average wealth, not distribution GDP Per Capita cont…

  7. Primary – agriculture, extract materials directly from the earth (fishing, mining,etc…) • Secondary – manufacturers that transform raw materials into useful products • Tertiary – involves the provision of goods and services to people in exchange for payment (education, government) Types of Jobs

  8. Agriculture: • At least 60% of people in PINGs work in agriculture • The high number means that most are subsistence farmers • Only 5% in PEDs • Within PEDs, the primary and secondary sectors have decreased, while tertiary has increased The distribution of the types of jobs varies between PEDs and PINGs

  9. Productivity = the value of a particular product compared to the amount of labor needed to make it • Productivity can be measured by the value added per worker • In manufacturing, P = the value of the product – the costs raw materials and energy Productivity

  10. The value added per manufacturing worker: • $80,000 in the U.S. • $70,000 in Japan • $1000 in China • $500 in India • Why the differences? • Workers in PEDs are more productive than in PINGs because workers in PEDs have access to more machines and equipment and are therefore able to produce more with less effort. Productivity cont…

  11. Raw materials and energy sources are essential to development! • The U.S. and USSR had them in the Cold War • In the 19th century, European countries established colonies as they ran short of raw materials at home Raw Materials

  12. Part of the wealth generated in PEDs goes towards buying essentials (food, clothing, shelter) • The rest of our wealth goes towards consumer goods and services (cars, phones, entertainment, computers) • The wealth spent on nonessentials helps to expand manufacturing and wealth in the country Consumer Goods

  13. Cars per 1000 people (2002) Where did Africa go?

  14. Three particular items: motor vehicles, telephones, and TV sets • In PEDs, the ratio is approaching 1:1 (one car per person, etc…) • In PINGs, these products do not play a role in the daily lives of most people Consumer Goods as a Measure of Development

  15. PEDs – wealth is used for schools, hospitals, and welfare services • This means that the people are better educated, healthier, and more prepared for hardships • What does this mean for the economy? • The population can be even more economically productive Social Indicators of Development

  16. The higher level of Development: the better the quantity and quality of education • One measure: The number of school years attended • PEDs – about 10 years • PINGs – a couple of years • The measure of the quality of education • Student teacher ratio • Literacy rate Education and Literacy

  17. When people get sick – PEDs have the wealth and resources to care for them • In many PEDs, health care is a public service • Also, PEDs often care for people who are unable to work Health and Welfare

  18. Life Expectancy • Infant Mortality Rate • Natural Increase Rate • Crude Birth Rate Demographic Indicators of Development

  19. Life expectancy = the number of years a newborn infant can expect to live at current mortality levels • In PEDs, life expectancy is in the mid-70s • In PINGs, life expectancy is in the mid-40s Life Expectancy

  20. Infant mortality rate = the death rate during the first year of life • In PEDs, 99.5% live • In PINGs, 94% live • Babies die from malnutrition, lack of medicine, or poor medical practices resulting from a lack of education Infant Mortality Rate

  21. NIR = averages 1.5% in PINGs • NIR = less than .1% in PEDs • Higher NIR strains a country’s ability to provide schools, hospitals, jobs, and other services Natural Increase Rate

  22. Natural Increase Rate

  23. PINGs have higher NIR because they have higher crude birth rates • Women in PEDs choose to have fewer children for economic and social reasons, and they have access to birth control Crude Birth Rate

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