UNIT 3 Developing Economies.docx (copy)

Countries that are characterized by low per capita income and are in the process of economic growth and development.

Countries that are characterized by low per capita income and are in the process of economic growth and development.

Developing Countries

An international organization that classifies countries into least developed, developing, and petroleum-rich categories.

United Nations (UN)

An international organization that classifies countries into low-income, middle-income, and newly industrializing categories.

Organization for Economic Cooperation and Development (OECD)

Also known as the World Bank, it classifies countries into low-income, middle-income, upper-middle-income, and high-income categories.

International Bank for Reconstruction and Development (IBRD)

Countries with a Gross National Income (GNI) per capita of USD 1,025 or less.

Low income economies

Countries with a GNI per capita of USD 1,026-4,035.

Lower-middle-income economies

Countries with a GNI per capita of USD 4,036-12,475.

Upper-middle-income economies

Countries with a GNI per capita of USD 12,476 or more.

High-income economies

The first important feature of underdeveloped countries is their low per capita income and high poverty rates.

Low-Per Capita Income or Poverty

Developing countries are generally predominantly agricultural, with a large portion of the population relying on agriculture for their livelihoods.1. Industrial sector:The sector of an economy that includes manufacturing, mining, construction, and utilities.

Excessive Dependence on Agriculture

Job openings or positions available for individuals to work and earn income.

Employment opportunities

Jobs that are not related to farming or agriculture, such as industry, transport, and services.

Non-agricultural occupations

The ratio of the population to the amount of available land.

Man-land ratio

The process of increasing the stock of capital goods in an economy through investment.

Capital formation

The motivation or incentive for individuals or businesses to invest their money in productive assets.

Inducement to invest

The average income per person in a given population or country.

Per capita income

The tendency of individuals to imitate or emulate the consumption patterns and lifestyles of wealthier or more developed countries.

Demonstration effect

A situation where individuals are employed but their work is not productive or necessary for the functioning of the economy.

Disguised unemployment

The increase in the number of individuals in a population over time.

Population growth

The number of deaths per 1,000 individuals in a population in a given time period.

Death rate

The number of births per 1,000 individuals in a population in a given time period.

Birth rate

Describes the situation in underdeveloped economies where natural resources are either unutilized or underutilized due to various difficulties such as shortage of capital and primitive technology.

Under-utilization of natural resources

Refers to the low quality of people as productive agents in underdeveloped countries, characterized by low labor efficiency, factor immobility, limited specialization, lack of entrepreneurship, illiteracy, and conservative social values.

Economic backwardness

Describes the dualistic character of developing economies, particularly those with surplus labor, where there is a sharp contrast between the traditional sector and the modern sector in terms of social systems and production techniques used.

Dualistic structure

Refers to the difference in production techniques or technologies used between the traditional sector (labor-intensive) and the modern sector (capital-intensive) in underdeveloped economies, leading to higher labor productivity and earnings in the modern sector.1. Unemployment:The state of being without a job or work.

Technological dualism

The state of having a job that is below one's skill level or not enough hours of work.

Under-employment

The coexistence of advanced and outdated technology in an economy.

Technological dualism

Technology that requires a large amount of capital investment.

Capital-intensive technology

The available resources, such as labor and capital, in an economy.

Factor endowments

The sector of the economy that uses advanced technology and techniques.

Modem sector

A plan or approach to promote economic development in a country.

Development strategy

Excess labor supply beyond the demand in an economy.

Surplus labour

The process of improving the economic well-being and living standards of a country.

Economic development

The level of wealth, comfort, and material goods available to people in a certain area.

Living standards

Countries with high levels of economic prosperity and wealth.

Rich countries

Countries with low levels of economic prosperity and wealth.

Poor countries

The absence of conflict and violence on a global scale.

World peace

The elimination or reduction of poverty in a society.

Poverty eradication

The abilities and freedoms that individuals have to live a fulfilling life.

Human capabilities

Actions taken to alleviate poverty and improve the well-being of the poor.

Anti-poverty measures

An increase in the production and consumption of goods and services in an economy.

Economic growth

Engaging in activities and personal states that are considered important and meaningful.

Valued functioning

The ability to make decisions and have control over one's own life.

Freedom of choice

The state of being happy, healthy, and prosperous.1. Developing countries:Countries that are in the process of improving their economic and social conditions.

Well-being

The average income of individuals in developing countries is lower compared to developed economies.

Low income per head

Due to low income, people in developing countries have limited ability to save money.

Low levels of saving

The average number of years a person is expected to live is significantly lower in developing countries compared to developed countries.

Low life expectancy

Developing countries often have limited access to quality education, resulting in lower levels of education among their population.

Low levels of education

Developing countries may lack adequate healthcare infrastructure and services, leading to poorer health outcomes.

Low levels of health care

Developing countries often have inadequate transportation, communication, and other basic infrastructure systems.

Poor infrastructure

Many people in developing countries lack access to clean water, proper sanitation facilities, and adequate housing.

Poor housing and sanitation

Developing countries tend to have a higher proportion of their workforce engaged in agriculture and other primary sector activities.

Concentration on primary sector

Underdevelopment trap

A situation where low incomes lead to low savings, which in turn hinders investment in capital goods and keeps productivity and income low.

Developing countries often have significant amounts of debt owed to foreign lenders, which can limit their ability to invest in education, healthcare, and other development initiatives.

High levels of international debt

Developing countries heavily depend on the export of primary products, such as agricultural commodities or raw materials.

Reliance on primary product exports

Insufficient spending on education, training, and skill development hampers productivity growth and international competitiveness.

Lack of investment in human capital

Highly skilled professionals, such as doctors and teachers, leaving their home country to seek better job opportunities abroad.

Emigration of key workers

Developing countries face barriers such as tariffs, subsidies, and other trade restrictions imposed by foreign governments, which can hinder their ability to export goods.1. Tariffs:Taxes imposed on imported goods, often higher for products that developing economies focus on, discouraging their industrial growth.

Trade restrictions

Economies with underdeveloped sectors, such as the financial sector, which can discourage saving and investment.

Unbalanced economies

The physical size of a country, along with its population and income level, determines its economic potential and differentiates it from other developing nations.

Size of the country

Many developing nations were once colonies of Western European countries, which influenced their economic structures and institutions.

Historical and colonial background

The availability of natural resources and the quality of the workforce in a country.

Endowments of physical and human resources

The relative importance of government-owned and privately-owned industries in a country's economy.

Public and private sectors

The composition and organization of industries within a country.

Industrial structure

The extent to which a country relies on foreign sources for economic and political stability.

Dependence on external economic and political forces

The allocation of power and the organization of institutions and political systems within a nation.1. Physical resources:Land, minerals, and other raw materials that influence a country's potential for economic growth.

Distribution of power and institutional and political structure

The numbers of people and their level of skills that influence a country's potential for economic growth.

Human resources

Countries with favorable physical resource endowments, particularly in oil.

Persian Gulf oil states

Countries with relatively minimal endowments of raw materials, minerals, and fertile land.

Chad, Yemen, Haiti, and Bangladesh

The attitudes, beliefs, and values of a country's population that influence its economic structure.

Cultural outlooks

The level of skills in managing and organizing that determine the ability of the public sector to alter the structure of production.

Administrative skills

The division between government-owned and privately-owned resources and their relative importance in a country's economy.

Public and private sectors

The degree to which private sector resources are owned by foreign investors.

Foreign ownership

The availability and shortage of skilled manpower in a country.

Skilled human resources

The composition and relative importance of agriculture, manufacturing, and service sectors in a country's economy.1. Third World development strategies:Vary depending on the nature, structure, and degree of interdependence among primary, secondary, and tertiary industrial sectors.

Industrial structure

Consists of agriculture, forestry, and fishing.

Primary sector

Mostly manufacturing.

Secondary sector

Commerce, finance, transport, and services.

Tertiary sector

The degree to which a country is dependent on foreign economic, social, and political forces.

External dependence