1 Growth and the Less-Developed Countries

2 What is one way to compare the well-being of one country to another? GDP per capita

3 What is GDP per capita? The value of final goods produced (GDP) divided by the total population

4 What are industrially advanced countries (IACs)? High-income nations that have market economies with technologically advanced capital and well-educated labor AKA – MDCs (Most Developed Countries)

5 Who are the advanced countries? d_country

6 What are less- developed countries (LDCs) ? Economies based on agriculture which are lacking in technology, advanced capital and well-educated labor

7 Developed and Developing Countries

8 Who are the LDCs? Most countries of Africa, Asia, and Latin America

9 Who is a problem? LDC’s per capita is subject to greater measurement errors than for IAC’s

10 What are problems in comparing GDP per capita? measurement errors income distribution fluctuations in exchange rates differences in living standards

11 Is GDP per capita correlated with other measures of quality of life? Yes

12 What are quality of life indicators? life expectancy adult literacy daily calorie supply energy consumption per capita

13 Latin Am & Caribbean S. AsiaMiddle East & N. America Sub- Saharan Africa Europe & Central Asia East Asia & Pacific IAC’s $34,799 $3,810 $3,666 $1,823 $1,080 $721 $629

14 What factors come together to produce a country’s growth? natural resources investment in capital investment in human capital (education & job training) low population growth infrastructure

15 What is infrastructure? Capital goods usually provided by the government, including highways, bridges, waste and water systems, and airports

16 What is a major problem for LDCs? They find themselves in a vicious cycle of poverty

17 What is the vicious circle of poverty? The trap in which countries are poor because they cannot afford to save and invest, but they cannot save and invest because they are poor

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19 What are the political factors favorable for economic growth? Gov’t stability (law and order) infrastructure international trade

20 Economic growth and development Natural resources endowment Human resources development Capital investment Technological progress Political environment

21 What is foreign aid? The transfer of money or resources from one government to another for which no repayment is required

22 In fiscal year 2011, the U.S. government allocated the following amounts for aid: Total economic and military assistance: $49.5 B ($52.7 B in 2010) –Total military assistance: $17.8 B ($15 B) –Total eco. assist: $37.7 B ($37.7 B) of which, USAID assist: $14.1 B ($14.1 B)

23 What is the Agency for International Development? AID is the agency of the U.S. State Department that is in charge of U.S. aid to foreign countries

24 What is the World Bank? The lending agency that makes long-term low-interest loans and provides technical assistance to less-developed countries

25 What is the International Monetary Fund (IMF)? The lending agency that makes short- term conditional low-interest loans to developing countries

26 What is the New International Economic Order (NIEO)? A series of proposals made by LDCs in 1974, calling for changes that would accelerate the economic growth and development of the LDCs

27 What is a conclusion? There is no single strategy for economic growth and development

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