Unit 6: Development Ch. 9 Development

Development Regional separation between division of wealthy & poor countries Development – process of improving the material conditions of people through diffusion of knowledge & technology MDC vs. LDC MDC = more developed, relatively developed, developed LDC = less developed, developing

Key Issue #1: Why Does Development Vary Among Countries? 3 factors in a country’s development level: ①Economic ②Social ③Demographic Human Development Index (HDI) – UN figure used since 1990 – Selects 4 factors (1 economic, 2 social, 1 demographic) – Highest possible score is 1.0 (100%) – Highest in 2013 – Norway (0.944) – Highest regions – Western Europe, U.S. & Canada – Lowest in 2013 – Niger (0.337) – Lowest Regions – Sub-Saharan Africa – U.S. was #5 in 2014; was #10 in 2005 (lower in education due to high HS drop out rates & lower in life expectancy due to inadequate health care for low income)

Key Issue #1: Why Does Development Vary Among Countries? Economic Indicators of Development – Before 2010, Gross Domestic Product (GDP) per capita was used in HDI – Now, Gross National Income (GNI) is used – adds economic output of foreign residents minus income of non-resident citizens/businesses; adjusted for Purchasing Power Parity (PPP) – GDP per capita Hard to determine average income Average income in MDC ($15 per hour) vs. LDC ($2 per hour) GDP – value of the total output of goods & services produced in a country (restricted to territory of country) Gross National Product (GNP) – value of the total output of goods & services produced by individuals & businesses of a country (ownership, not location); not viewed as being as useful of a comparison as GDP – PPP – used to adjust GDP or GNI or GNP based on exchange rates & inflation; reflects transaction values for traded goods only (GDP includes non-traded goods) – Traded goods – good or service that can be sold in a location different that where it was produced (non-traded goods: haircuts, massages, prepared food, construction, etc.)

Key Issue #1: Why Does Development Vary Among Countries? Economic Indicators of Development – GDP Per Capita Total GDP / population = GDP per capita Ex. U.S. - $16.8 trillion GDP / 319 million people = approx. $53,000 GDP per capita MDC vs. LDC in $27,000 vs. $4,000 Range: over 100,000 in Liechtenstein, Luxembourg, Monaco, & Norway to 229 in Burundi per UN in 2013 In 2005, below $1,000 in 15 African countries & 3 Asian countries Growth in LDCs avg. GDP per capita ($800 to $4,400); increase of 450%; rapid growth in China, modest growth in Africa MDCs saw a 55% increase (grew by $10,000) GDP is not a perfect measure – few starving in LDCs, 1/8 of U.S. in poverty (1/4 of African Americans & 1/5 of Hispanics) GDP per capita measures average/mean wealth not its distribution

Key Issue #1: Why Does Development Vary Among Countries? Economic Indicators of Development – Types of Jobs Categories: ①Primary – direct use of raw materials (farming, timber, fishing, mining) ②Secondary – manufacture of raw materials ③Tertiary – provision (selling) of goods & services ④Quaternary – business services (trade, insurance, banking, advertising) ⑤Quinary – usually information & data-driven; health, education, research, gov’t, tourism, recreation Some consider tertiary to include quaternary & quinary LDCs – 60% of pop. in primary sector; MDCs – 5% in primary sector Most people in LDCs spend effort/time on food for survival; MDCs need very few farmers to produce enough food for entire pop. (more people can work in secondary & tertiary+ jobs to increase country’s wealth) Decline in primary & secondary jobs in MDCs also because of global competition for industry (service sector growing in MDCs due to increasing demand)

Key Issue #1: Why Does Development Vary Among Countries? Economic Indicators of Development – Productivity Productivity = value of a product compared to amount of labor required (higher in MDCs) Value added = gross value of product – cost of raw materials & energy – $80,000 in U.S. & $70,000 in Japan vs. $1,000 in China & $500 in India Less effort in MDCs & more efficient due to machinery, tools, equipment LDCs require more human & animal power – Raw Materials U.S. & Russia are very rich in raw materials (amount & variety) U.K. became 1 st developed country due to coal & iron in late 1700s (Industrial Rev.) Europe began to import raw materials once they ran out locally (imperialism & colonialism) Some LDCs gaining wealth through oil or other energy resources Demand for some raw materials has declined (cotton, copper) As demand falls, prices fall Countries without resources are able to develop through trade (Japan, Singapore, Switzerland, South Korea)

Key Issue #1: Why Does Development Vary Among Countries? Economic Indicators of Development – Consumer Goods Most important are transportation & communication (motor vehicles, telephones, computers, Internet etc.) Cars, computers, & phones are not as important in LDCs – workers often live in small, rural areas in low-tech jobs MDCs: 500 land-line phones per 1,000 people; 400 motor vehicles per 1,000; 300 Internet users per 1,000 LDCs: less than 100 per 1,000 for all 3 – Most familiar with the goods, but cannot afford – Large gap between haves (gov’t, elite, business owners) & have-nots; wealthy are usually in cities – Income gap may lead to social/political unrest – Goods contribute to increased leisure time & cultural diversity – Goods also reduce gap to communication between LDCs & MDCs

Key Issue #1: Why Does Development Vary Among Countries? Social Indicators of Development – MDCs are typically better educated, healthier, & better protected from hardships; infants more likely to survive; people can be more economically productive – Education & Literacy UN used literacy rate & average years of schooling until 2010 for the HDI Currently, the UN uses average years of schooling & expected years of schooling for the HDI Quantity of education – avg. # of years attending school Quality of education – student-teacher ratio & literacy rate Years of schooling: 10 years on avg. in MDCs vs. 2 years in LDCs 2x higher student-teacher ratio in MDCs MDCs have more books, newspapers, & magazines (LDCs often have to learn from textbooks from MDCs & in a different language) Literacy rate – over 98% in most MDCs; less than 60% in most LDCs LDCs spend less per pupil but often a higher % of their GDP

Key Issue #1: Why Does Development Vary Among Countries? Social Indicators of Development – Health & Welfare MDCs spend higher % of GDP on healthcare Influenced by diet – MDCs consume more calories & proteins per day than LDCs (MDCs often more than needed, LDCs often less than needed/malnutrition) Health care often free or low cost public service in MDCs (70% paid by gov’t in Europe) Over 50% paid by individual in LDCs (and in U.S.) Welfare – income protects those who cannot or do not work (sick, poor, elderly, orphaned, veterans, widows, unemployed, single parents); highest in N & W Europe Sweden, Norway, & Denmark spend most as % on welfare Economic slowdown affects MDCs’ ability to provide high level of public assistance Affordable Care Act (Obamacare) – attempt by U.S. to bring its health care coverage more in line with other MDCs

Key Issue #1: Why Does Development Vary Among Countries? Demographic Indicators of Development – Life Expectancy (used by UN for HDI calculation) Avg. of 60s in LDCs; Avg. of 70s in MDCs Gender gap: males 10 years longer in MDCs; females 13 years longer in MDCs More elderly in MDCs, lower % of under-15 (dependency ratio) 6x more young people in LDCs than old people (practically even in MDCs) – Infant Mortality Rate (IMR) LDCs – 6% on avg. (malnutrition, lack of medicine, dehydration from diarrhea, poor medical practices during pregnancy & birth, lack of education) vs. MDCs – 0.5% on avg. – Natural Increase Rate (NIR or RNI) Higher in LDCs – strains provision of services (schools, hospitals, jobs, housing, etc.) 15 per 1,000 (1.5%) per year in LDCs vs. 1per 1,000 per year in MDCs (0.1%) – Crude Birth Rate (CBR) Higher in LDCs – 24 per 1,000 vs. 11 per 1,000 in MDCs MDCs – economic & social reasons for fewer children; access to birth control CDR does not affect development; slightly lower in several LDCs than MDCs (aging pop.)

List of selected countries (2014 data) CountryGDP per capita in U.S. dollars GDP per capita (PPP adjusted) in Geary-Khamis dollars or International dollars GNI per capita (PPP adjusted) Luxembourg103,18797,63959,750 Qatar78,829137,162123,860 U.S.55,90454,37053,960 Singapore53,22483,06676,850 U.K.44,11839,82635,760 Japan32,48137,51937,630 Greece17,65725,95425,630 Argentina13,42822,302N/A World10,02314,98214,931 China8,28013,22411,850 Algeria4,34513,88812,990 Indonesia3,41210,6519,260 Bangladesh1,2663,3912,810 Burundi