Economic Development and Transition Chapter 18

Levels of Development Chapter 18, Section 1

Levels of Development ½ the world lives in poverty Economic well being is measured in terms of development the process by which a nation improves economic, political and social well being of its people

Developed Nations and LDC’s Developed nations are nations with a higher level of material well being LDC’s or Less Developed Nations are nations with low economic well being Mexico, Nepal, Central and Southern Africa, Republics of the former Soviet Union

Measuring Development Factors used in measuring development Life expectancy Infant mortality Health care Literacy Labor force Consumer goods Infrastructure Energy consumption Per Capita GDP

Issues of Development Chapter 18, Section 2

Issues of Development Population growth Lack Factors of Production Countries are increasing population without increasing their economy or development Lack Factors of Production Land, Physical Capital, Human Capital Brain Drain…skilled people moved to more developed nations Political Factors Corrupt governments, instability, debt

Financing Development Chapter 18, Section 3

Developing Countries Need to Raise Financing Internal financing…savings and investing from within… LDC’s don’t have a lot of people who can do this. Foreign investment Foreign direct…building in the nation…done by MNC’s Foreign portfolio…investing in stocks and bonds of foreign countries

Foreign Aid Some nations give aid (not loans) to LDC’s for varied reasons Political Economic Human compassion World Bank Institution that raises money to distribute to nations of need Coordinates economic development throughout the world

International Monetary Fund (IMF) Aids desperate countries through debt rescheduling and stabilization programs Conditions are set by the IMF

Transitions to Free Enterprise Chapter 18, Section 4

Moving Towards a Market Economy Privatization…sale and transfer of government owned businesses to individuals Property rights need to be protected

Transitions in Nations Russia and Glasnost Policy of political openness and reform that encouraged citizens to say what they wished without persecution Perestroika…plan for transition from command to free economy China and the Great Leap Forward Plan for China to turn into an economic power All land was taken over by the government Huge disaster as there was no incentive China now blends free markets and command ideals for their economic plan