Ch. 9 Key Issue 1

Why Does Development Vary Among Countries?

What do you think development is?

• How should development be defined?• How should it be viewed? Is it an

inherently “Western” idea?

What is Development?• Development implies progress- usually means

improvements in tech., production, and social and economic welfare of people

• Countries cluster at the high (MDC) and low (LDC) ends of the spectrum– MDCs and LDCs tend to cluster together in space

Key Indexes• Gross National Product (GNP)- total dollar value of

the officially recorded goods and services produced in and out of a country

• Gross Domestic Product (GDP)- total value of goods and services produced only within the country per year

• Gross National Income (GNI): – GDP+income - payments to other countries

The 3 Categories of Development• Stems from idea that Indus. Rev and

tech. can improve lives of people• There are three ways we can measure a

country’s development:– Economic indicators– Social indicators–Demographic indicators

Human Development Index• To reveal the level of development, the HDI,

created by the UN, combines 4 indicators:–1 economic–2 social and –1 demographic indicator

• HDI ranges from 0-1• 30 of lowest 32 countries found in sub-

Saharan Africa

Economic Indicators of Development• HDI uses Gross Domestic Product (GDP) per

Capita (per person)–Per capita GDP can help determine average

wages in a country• Dividing GDP by the population (per capita) =

contributions made by each person towards a country’s wealth

• GDP alone can be misleading: Not everyone is starving in LDCs with GDP p/c of $3000. Or wealthy in US with $45,000 GDP p/c

Other Economic Development Indicators

• These indicators are used to distinguish between MDCs and LDCs but not used by the UN to calculate HDI.–Types of Jobs–Worker productivity–Consumer goods

Types of Jobs• Wages are higher in MDCs than LDCs

because people earn living in different ways

• Called the International Division of Labor–Primary sector- extracting materials, hard

manual labor (mostly LDCs)– Secondary sector- manufacturing process (raw

materials into products) (more LDCs than MDCs now)–Tertiary sector- services: exchanging goods

and services for money (mostly MDCs)

Occupational Structure• China GDP $6,200– agriculture 49%, industry 22%, services 29%

• Australia GDP $32,000– agriculture 3.7%, industry 26.4%, services 70%

• Philippines GDP $5,100– agriculture 36%, industry 16%, services 48%

• Luxembourg GDP $59,143– Agriculture 1%, industry 30%, services 69%

• Singapore GDP $21,492– agriculture 0%, industry 30%, services 70%

Occupational Structure• Equatorial Guinea GDP $5,900–agriculture 20%, industry 60%, services 20%

• Haiti GDP $346–Agriculture 32%, industry 20%, services 48%

• Malawi GDP $156–agriculture 37%, industry 29%, services 34%

Worker Productivity• Workers are more productive in MDCs –

they produce more with less effort–MDCs have machines and tools– LDCs rely on human and animal power

• Value added measures productivity– Selling price – inputs (labor, parts, etc.) =

Value Added• High p/c GDP allows countries to invest in

productivity which increases wealth

Consumer Goods• High GDP p/c wealth used to purchase

cars, cell phones, internet, etc.• More necessary in MDCs than in LDCs since

population is more dispersed• Creates a gap of “haves” and have-nots” in

LDCs = conflict? –Owners of consumer goods are concentrated

in the urban areas of LDCs

Social Indicators of Development• MDCs use wealth to provide schools and

healthcare healthier, educated, protected from hardships = economically productive citizens

• 2 social indicators used to measure HDI: Education and Literacy– Education means student/teacher ratio- Less

students, more personalized instruction in MDCs– Literacy rate- More books, magazines, newspapers

printed in MDCs

Social Indicators of Development• Health and welfare– Diet- more calories and protein in MDCs– MDCs have resources to care for sick- more

hospitals/doctors p/c– LDCs have to pay more for health care- gov’t does

not have GDP resources to pay for• MDCs have “safety net” programs”: Struggled to

pay for recently because of slowing economic growth and aging population– Faced with cutting benefits or increasing taxes

Demographic Indicators of Development• Demographics: characteristics of a

population (think demographic transition)• HDI uses life expectancy as main indicator–Better health and welfare permit people to

live longer (60 in LDC, 70 in MDC)– Low life expectancy means more young

people in LDCs (6x more young people = high youth dep. ratio)

• IMR, NIR and CBR can be used to distinguish between MDCs and LDCs

Uneven Development within Countries• Islands of Development–Gov’t prioritizes creation of wealth in one city–Companies usually set up close to their

resources, need cities to house workers and fulfill their needs– Leads to one super developed city in an

“underdeveloped’ country • Informal economy is not counted- what the

government does not keep track of, or is illegal