Chapter 20 Economic Growth in Developing Nations.

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Presentation transcript:

Chapter 20 Economic Growth in Developing Nations

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Developed vs. Developing Nations  Developed nations- industrialized nations with a relatively high standard of living  Developing nations- nations with little industrial development and relatively low standards of living  Standard of living- ability to live comfortably; based on life expectancy, infant mortality rate, and literacy rate

Characteristics of Developing Nations  Low GDP  Agricultural economy- subsistence level agriculture  Poor health conditions  High infant mortality rate  Short life expectancy  Low literacy rate  Rapid population growth  Weak property rights

The Process of Economic Development  Foreign investment  Foreign Aid Economic assistanceEconomic assistance Technical assistanceTechnical assistance Military assistanceMilitary assistance

Reasons for Giving Aid  Humanitarianism  Political Alliances

4 Obstacles to Growth in Foreign Nations  Attitudes and Beliefs  Continued rapid population growth  Misuse of resources  Trade restrictions

  In 1970, 60% of Indonesians lived below the poverty line. By 1996, that number decreased to 11%. Unfortunately, brought several economic setbacks that brought to light the need for meaningful political and economic change. The new govt. has promised to allow the formation of new political parties, greater freedom of the press, released many political prisoners, and punished high-ranking officers for the kidnapping of activists and other misdeeds. Worker rights are now officially recognized but the enforcement of labor standards remains weak. Why is financial investment more effective in promoting growth in some countries than others? Must a strong govt. that supports human rights be in place before the obstacles to economic growth are removed?

A. A. People don’t trust innovation and technology; they are comfortable with the old way of doing things B. B. The population is growing much faster than the GDP C. C. Corrupt governments and poor allocation of resources (capital flight) D. D. Trade restrictions in developed nations make it difficult or impossible to increase exports Which of the four obstacles do you think is the most detrimental to development?

Case Study: Indonesia   Indonesia had a large population and rich natural resources   Received $2 billion in foreign aid, but the economy was still a disaster   The people were divided by ethnicity, religion, and politics   Economy under Sukarno was a disaster   Suharto improved economy, but relied too heavily on oil  oil crisis  economic crisis   Too much government control over economy How might things have been different in Indonesia if they had a new leader every 4 to 8 years, rather than 30 years?