1. Development: The Basics
Remember: Most heavily weighted portion of the syllabus and IB Exam

2. Development vs. Growth Growth: QUANTITATIVE –
Increase in Real GDP/Capita
Development: QUALITATIVE –
Improvement in people’s quality of life,
More subjective, Measured by Human
Development
Index

3. HDI: 3 components Standard of living – Real GDP/capita
Health – Life expectancy
Education – Literacy rate

4. LDCs: Less Developed Countries
Most in Sub-Saharan Africa, also Asia
Low income – Less than $3000 GDP/capita
Poor infrastructure, education, health care, human rights
High corruption, population growth, unemployment, environmental damage
Mostly primary products (farming, fishing, etc)

5. Other categories MDCs – More Developed Countries
a.k.a Developed, Rich, Industrialized
> $20,000 GDP/capita, Europe, US, Japan, etc.
Middle countries - $3000-$20,000 GDP/capita
Mexico, China, most of S. America & Asia
NICs – Newly Industrialized Countries
China, India, Brazil, etc.
Transitional – From central planning to
market system, e.g. Russia, Poland

6. Cycle of Poverty: How to break it?

7. Development strategies
AID – Loans
Tied - often “soft”
Untied - often “hard”
Bilateral – one country loaning to another
Multilateral – a group of countries or an international agency loaning to one country
Grants - not really a loan; just a freebie

8. Development strategies
TRADE
Specialization & Comparative advantage
Focus on what you produce the best, trade that to others for what they produce best
Export promotion vs. Import substitution

9. Development Strategies
Foreign Direct Investment (FDI)
Attract foreign companies to build factories, stores, etc. in your country

10. Development Strategies
Micro-credit schemes
Very small loans to help people start or
expand their own little business

11. Development Strategies
Dual sector model
Improve productivity in existing areas of
specialization,
Use increased profits to gradually industrialize
and move into service sector

12. Sustainable development
The ideal goal
Improving the quality of life today and for generations to come
Improving the quality of life without damaging the environment