Developing Nations Created by: Ms. Daniel 

3 Stages of Economic Development 1. Agricultural 2.Manufacturing 3. Service Sector

Common Economic Traits of Developing Nations Low Per Capita GDP Limited Resources Rapid Population Growth Subsistence Agriculture Manufacturing Growing middle class

Obstacles to Economic Growth in Developing Nations Rapid Population Growth Lack of Natural Resources Free Trade

Obstacles to Economic Growth SCARCITY OF RESOURCES AND UNDERUTILIZATION OF TECHNOLOGY- lack of skill, natural resources, capital and technology INADEQUATE ECONOMIC INFRASTRUCTURE- communication, roads, bridges, airports, water system POLITICAL INSTABILITY SOCIAL AND CULTURAL BARRIERS

Financing Economic Development Domestic Savings Banks and international Corporations Foreign Aid- World Bank, International Monetary Fund, United Nations

Multinational Corporations and Developing Countries Multinational Corporations are large corporations that produce and sell goods throughout the world

Reasons why a Multinational Corporation would go to a developing country Lower production costs- natural resources and labor in many Lesser Developed Countries (LDC) are very cheap Lower corporate taxes- often the LDC will offer a tax break to the MNC to encourage them to build a factory in their country Avoid Trade Restrictions- many LDC do not have import quotas or protective tariffs Expand their Market- widens the potential market for MNC’s products

Employment Opportunities for MNC and Developing Countries Advantage Creates new jobs for the local citizens and increase business for the local companies that provide goods for the MNC Disadvantage Can force local businesses to close down because they can’t compete with the wages paid by the MNC, some MNC build capital-intensive factories in a labor intensive country which do not help the standard of living for people in the country, many of the new jobs created by the MNC require few skills and are not in management positions

Economic Growth for MNC and Developing Countries Advantages Adds to the factors of production providing access to financial markets from around the world and creates a global market for domestic goods Disadvantages Can created a shortage of loan money if the MNC borrows from local banks which will result in the local bank not having enough money to loan to local businesses

Quality of Life for MNC and Developing Countries Advantages Higher unemployment, increase in national income, increase in standard of living, increase in tax money, improvement in infrastructure (roads, hospitals, bridges, schools…) Disadvantages Increase in pollution, increase in corruption, uneven distribution of wealth between rich and poor citizens