1. Economic Development and Transition
Chapter 18

2. Levels of Development
Chapter 18, Section 1

3. Levels of Development ½ the world lives in poverty
Economic well being is measured in terms of development
the process by which a nation improves economic, political and social well being of its people

4. Developed Nations and LDC’s
Developed nations are nations with a higher level of material well being
LDC’s or Less Developed Nations are nations with low economic well being
Mexico, Nepal, Central and Southern Africa, Republics of the former Soviet Union

5. Measuring Development
Factors used in measuring development
Life expectancy
Infant mortality
Health care
Literacy
Labor force
Consumer goods
Infrastructure
Energy consumption
Per Capita GDP

6. Issues of Development
Chapter 18, Section 2

7. Issues of Development Population growth Lack Factors of Production
Countries are increasing population without increasing their economy or development
Lack Factors of Production
Land, Physical Capital, Human Capital
Brain Drain…skilled people moved to more developed nations
Political Factors
Corrupt governments, instability, debt

8. Financing Development
Chapter 18, Section 3

9. Developing Countries Need to Raise Financing
Internal financing…savings and investing from within…
LDC’s don’t have a lot of people who can do this.
Foreign investment
Foreign direct…building in the nation…done by MNC’s
Foreign portfolio…investing in stocks and bonds of foreign countries

10. Foreign Aid
Some nations give aid (not loans) to LDC’s for varied reasons
Political
Economic
Human compassion
World Bank
Institution that raises money to distribute to nations of need
Coordinates economic development throughout the world

11. International Monetary Fund (IMF)
Aids desperate countries through debt rescheduling and stabilization programs
Conditions are set by the IMF

12. Transitions to Free Enterprise
Chapter 18, Section 4

13. Moving Towards a Market Economy
Privatization…sale and transfer of government owned businesses to individuals
Property rights need to be protected

14. Transitions in Nations
Russia and Glasnost
Policy of political openness and reform that encouraged citizens to say what they wished without persecution
Perestroika…plan for transition from command to free economy
China and the Great Leap Forward
Plan for China to turn into an economic power
All land was taken over by the government
Huge disaster as there was no incentive
China now blends free markets and command ideals for their economic plan