Developing Countries CHAPTER 17 SECTION 1: Economic Development Holt Economics 4/21/2017 CHAPTER 17 Developing Countries SECTION 1: Economic Development SECTION 2: Challenges to Growth SECTION 3: Paths to Economic Development Chapter 17

Objectives: Economic Development SECTION 1 What characteristics do developing countries have in common? How can scarcity of resources affect a developing nation?

Characteristics of developing countries: SECTION 1 Economic Development Characteristics of developing countries: low per capita GNI limited or insufficient use of resources high population growth rate dependence on agricultural production

Potential effects of resource scarcity on a developing nation: SECTION 1 Economic Development Potential effects of resource scarcity on a developing nation: inability to compete in the global marketplace inability to trade limited economic growth dependence on a subsistence agriculture

Objectives: Challenges to Growth SECTION 2 How do many developing countries respond to scarce factors of production? How can the status of an economic infrastructure help or hinder a developing country? How can political instability challenge a developing nation?

Many developing countries’ response to scarce factors of production: SECTION 2 Challenges to Growth Many developing countries’ response to scarce factors of production: specialization in the production of goods increased spending on primary and secondary education nationalization, expropriation, and privatization of industries and businesses

Impact of an economic infrastructure on a developing country: SECTION 2 Challenges to Growth Impact of an economic infrastructure on a developing country: can limit or expand development can discourage or promote production and trade can restrict or improve development of human resources can discourage or encourage savings and investment can lead to nationalization, expropriation, and privatization of industries and businesses

Potential effects of instability on a developing nation: SECTION 2 Challenges to Growth Potential effects of instability on a developing nation: can discourage foreign investment can disrupt normal business activity can destroy capital investment can restrict economic development

SECTION 3 Paths to Economic Development Objectives: What are the characteristics of the socialist and capitalist models of decision making? What types of aid do governments extend to developing countries? What are the key public sources of foreign aid?

Characteristics of the socialist model of decision making: SECTION 3 Paths to Economic Development Characteristics of the socialist model of decision making: ability of government to direct and redirect resources and production toward specific economic goals inefficiency bureaucratic resistance to change corruption

Characteristics of the capitalist model of decision making: SECTION 3 Paths to Economic Development Characteristics of the capitalist model of decision making: freedom to make economic decisions difficulty in redirection of resources and production toward specific economic goals

Types of aid governments extend to developing countries: SECTION 3 Paths to Economic Development Types of aid governments extend to developing countries: economic assistance military aid emergency assistance

Key public sources of foreign aid: SECTION 3 Paths to Economic Development Key public sources of foreign aid: the World Bank the International Monetary Fund the United Nations regional organizations

CHAPTER 17 Wrap-Up 1. How is per capita GNI used to classify developing nations? 2. What are developing nations’ three major obstacles to capital formation? 3. Why is scarcity a problem for developing nations? 4. How can leaders influence economic growth and development in a nation that uses the capitalist decision-making model? 5. Provide an example of each of the following: economic assistance, military assistance, and emergency assistance.