Common Characteristics of Developing Countries
Introduction to Developing Country Characteristics
Every country possesses unique cultures, geographies, currencies, and worldviews.
The developing world is exceptionally diverse but shares common characteristics.
This lecture aims to explore these common characteristics and assess whether, economically, developing countries are converging with developed countries over time.
Lecture Structure
The lecture is divided into four videos.
The first three videos will focus on 10 common characteristics of developing countries.
A historical comparison will be made between today's developing countries and today's developed countries historically.
The last video will address the concept of convergence, examining if living standards across countries are becoming more similar and if developing countries are catching up economically.
Common Characteristics of Developing Countries (Overview)
There are many potential characteristics to list; the course focuses on 10 important ones.
These characteristics are extremely common across low-income and middle-income countries.
However, due to significant diversity, these characteristics may not apply to every single developing country, and the degree to which they apply will vary.
Characteristic 1: Low Levels of Living and Productivity
Low Levels of Living: Refers to various measures of well-being, most importantly per capita income.
Global Income Distribution (2002-2008):
High-income countries, despite having a relatively small fraction of the world's population, accrued 54\% of global income.
This trend is consistent even in more recent data, like 2020.
Regional Income Shares:
East Asia & Pacific and Latin America & Caribbean hold fairly sizable portions of low and middle-income country shares.
Sub-Saharan Africa garners a very small share, reflecting significant development challenges.
South Asia accounts for about 7\% of world income.
The large share for East Asia & Pacific is partly due to its very large population.
Low Levels of Productivity: Measured by output per worker (value added per worker) and other factors.
Output Per Worker Comparison:
1991: Developed countries produced 48,000 PPP adjusted dollars per worker, while developing countries averaged only 6,000 PPP adjusted dollars (a factor of almost 10 difference).
Current: The difference has improved but is still a factor of about 5.
Other Productivity Measures: Agricultural land productivity (output per acre) is also significantly higher in high-income countries.
Underlying Question: A key area of research is understanding why resources (labor, land, capital) are more productive in high-income countries and the nature of the economic environment that determines this productivity.
Characteristic 2: Low Levels of Human Capital
Child Mortality:
There is a stark correlation between levels of development and child mortality (under-five mortality).
In high-income countries, child mortality is relatively low.
In developing countries, while it has improved significantly (e.g., between 1990 and 2012 and beyond), children are still much more likely to die before the age of five.
Education - Net Primary School Enrollment Rates:
High-income countries: Average enrollment is about 95\%.
Low-income countries: Only about 80\% of age-appropriate children are enrolled.
Regional variations exist; Latin America and the Caribbean have improved dramatically, but Sub-Saharan Africa lags significantly.
Academic Resources - Student-Teacher Ratios (Primary School):
High-income countries: Average ratio is about 15.
Low-income countries: Average ratio is about 45.
Example: Classrooms in India can have as many as 80 third-grade students, which significantly hinders productive learning compared to smaller classes of 15 or 20.
Correlation & Compounding Effects:
Higher levels of maternal education are generally associated with lower levels of child mortality.
This suggests a compounding effect where low human capital in one area can lead to similarly low levels in others.
Open Research Question: The exact causal relationship between parental education and household health outcomes is not fully understood, though ideas include better understanding of medication, improved communication with doctors, and general health knowledge.
Characteristic 3: High Levels of Inequality and Absolute Poverty
High Inequality: Within developing countries, high-income individuals often earn a grossly disproportionate share of the national income.
Absolute Poverty: Refers to subsistence-level poverty where individuals struggle to meet basic needs like nutritional requirements or treating basic diseases.
Individuals in absolute poverty are highly vulnerable to unexpected economic shocks (e.g., job loss, bad harvest, death of livestock), which can determine their ability to feed their children.
Measurement - World Bank's "1-a-Day" Count:
Used to identify individuals living below a very low well-being threshold (originally 1 a day, now 1.25 a day).
Trends in Absolute Poverty (Global, 1981-2006):
Globally, the number of individuals in absolute poverty has improved dramatically, especially in East Asia & Pacific.
South Asia saw relative stability during this period but has improved more recently.
Sub-Saharan Africa experienced an increase in the number of individuals in absolute poverty due to unique regional challenges.
Developing countries, compared to high-income countries, generally have significantly higher numbers of individuals living near the subsistence threshold.
Characteristic 4: High Population Growth
Crude Birth Rate: This measure refers to the number of live births per 1,000 individuals in the population.
More developed countries typically have a crude birth rate of less than 10.
The poorest developing countries can have birth rates over five times higher than developed countries.
Impact of High Birth Rates:
Resource Strain: High population growth can stress limited governmental and natural resources, making it challenging to care for a larger population.
Demographic Composition: Developing countries tend to be much younger on average, with a significantly larger relative population of younger people compared to older people. This will be discussed further in the population section of the course.