Global Economic Development

What is “development”? Development is the process by which a nation improves the economic, political, and social well- being of its people. Development is the process by which a nation improves the economic, political, and social well- being of its people. “Developed nations” – have a higher average level of material well-being “Developed nations” – have a higher average level of material well-being

Less Developed Countries – LDCs : nations with a low level of material well- being nations with a low level of material well- being

Measurements of development GDP – Gross domestic Product – the value of goods & services produced in a country in a year GDP – Gross domestic Product – the value of goods & services produced in a country in a year *****Per capita GDP – divides the gdp by the *****Per capita GDP – divides the gdp by the population population -- better measure of standard of living -- better measure of standard of living

#1 – USA, #2 – China, #3 - Japan

What are some other measures of development? Energy consumption : Energy consumption : - the amounts of fossil fuel, hydroelectricity, - the amounts of fossil fuel, hydroelectricity, and nuclear energy a nation uses depends on and nuclear energy a nation uses depends on its level of industrialization its level of industrialization

Labor force : nations with little industrialization tend to have most of labor force devoted to agriculture – subsistence farming Consumer goods : a large number of consumer goods – people have basic needs met & money left over for “wants” Literacy rate : - the portion of the population over age 15 that can read & write - more education = more productivity

Life expectancy : Life expectancy : - the average expected life span of an individual - the average expected life span of an individual - indicates quality of life – nutrition, sanitation, - indicates quality of life – nutrition, sanitation, health care, etc. health care, etc.

Infant mortality rate : Infant mortality rate : -the number of deaths in the first year of -the number of deaths in the first year of life per 1000 live births life per 1000 live births - indicator of nutrition, health care, sanitation - indicator of nutrition, health care, sanitation

Financing development Internal financing : Internal financing : - from savings of citizens - from savings of citizens - most people in LDCs don’t have enough $ to save … & the wealthy often keep $ in foreign banks and invest in foreign companies - most people in LDCs don’t have enough $ to save … & the wealthy often keep $ in foreign banks and invest in foreign companies

Foreign investment Foreign direct investment: Foreign direct investment: - the establishment of an enterprise by a foreigner - the establishment of an enterprise by a foreigner - ex : American company building a factory in Brazil - ex : American company building a factory in Brazil Foreign portfolio investment : Foreign portfolio investment : - foreigners making purchases in country’s stocks and bonds market - foreigners making purchases in country’s stocks and bonds market

Foreign aid loans and aid for development : loans and aid for development : - humanitarian, military, political, economic - humanitarian, military, political, economic

International Economic Institutions World Bank : World Bank : - founded 1940 – raises $ on financial markets & contributions from wealthier member nations - founded 1940 – raises $ on financial markets & contributions from wealthier member nations - offers loans, advice & other resources to over 100 LDCs - offers loans, advice & other resources to over 100 LDCs International Monetary Fund: International Monetary Fund: – originally to stabilize international exchange rates – originally to stabilize international exchange rates - facilitates development through debt rescheduling, stabilization programs - facilitates development through debt rescheduling, stabilization programs

United Nations Development Program –UNDP United Nations Development Program –UNDP - funded by contributions of UN members - dedicated to the elimination of poverty through development - dedicated to the elimination of poverty through development - 90% of its resources go to 66 low-income nations, where 90% world’s poorest people live