Chapter 2

Report
Chapter 2
Comparative
Economic
Development
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Country Classifications
World Bank ranks countries on GNI per capita
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Low Income Countries (LIC)
Low Middle Income Countries (LMC)
Upper Middle Income Countries (UMC)
High Income Countries (HIC)
Organization for Economic Cooperation and
Development (OECD)
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Classification of Economies by Region
and Income in 2007
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Classification of Economies by Region and
Income, 2007
(Latin America and the Caribbean)
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(Sub-Saharan Africa)
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Classification of Economies by Region and
Income, 2007
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Nations of the World, Classified by
GNI Per Capita
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Measuring Development
• Gross National Income (GNI)
• Gross Domestic Product (GDP)
• Purchasing Power Parity (PPI): method
instead of exchange rates as conversion
factors
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Income Per Capita in Selected
Countries
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Comparison of Per Capita GNI, 2005
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Basic Indicators of Development
• Health Conditions
• Life Expectancy
• Education Achievements
• Human Development Index (HDI): a composite
measure of living standards
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Commonality and Diversity:
Some Basic Indicators
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Human Development Disparities
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Human Development Disparities
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Human Development Index:
23 Countries, 2004
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Human Development Index:
23 Countries, 2004
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Human Development Index Variations:
Similar Incomes, 2004
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Common Characteristics of LDCs:
1. Lower levels of living and productivity
2. Lower levels of human capital investment
(health-care, education, skills)
3. Higher levels of income inequality and
poverty
4. Higher population growth rates
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Shares of Global Income, 2005
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Most and Least Populated Countries
and Their Per Capita Income, 2005
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Child Mortality Rates, 1990 and 2005
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Primary School Enrollment and
Pupil-Teacher Ratio
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Correlation between Child Mortality
and Mother’s Education
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People Living in Poverty, 1981-2002
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Common Characteristics of LDCs:
5. Greater social fractionalization
6. Larger rural population, but
rapid rural-urban migration
7. Lower levels of industrialization and
manufactured exports
8. Adverse geography and resource endowment
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Urban Population in LDCs
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Share of Population Employed in Industry
2000-2005 (%)
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Common Characteristics of LDCs:
9. Underdeveloped financial and other markets
– Imperfect markets
– Incomplete information
10. Colonial legacy and external dependence
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Institutions
Private property
Personal taxation
Taxes in cash rather than in kind
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LDCs Today vs. MDCs Then
1. Physical and human resource endowments
2. Per capita incomes and levels of GDP
3. Climate
4. Population size, distribution, and growth
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LDCs Today vs. MDCs Then
5. Historic role of international migration
6. International trade benefits
7. Scientific innovation & technological advancement
8. Effectiveness of domestic institutions
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Convergence?
• The closing economic and technological
gaps between LDCs and MDCs?
• Evidence of unconditional convergence is
hard to find
• Per capita income convergence?
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Convergence in OECD
Divergence in the World
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Per Capita GDP Growth in LDCs,
1995-2005
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Growth Convergence and
Income Convergence
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