Diverse structures and common characteristics
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Diverse Structures and Common Characteristics . Study of Developing Nations. 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

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Classification of economies l.jpg
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


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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





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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




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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


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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.


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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


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Common Characteristics of Developing Nations: observations

  • 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


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


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Income: observations Comparison of GNP Per Capita


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



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Poverty observations: Share of population living on < $1/ day

* Increase in absolute number of people


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


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Health and Education: observationsIndicators


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HDI and GDP Ranks observations





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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


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