1. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Contemporary Economics: An Applications Approach By Robert J. Carbaugh 3rd Edition Chapter 18: Economic Environments and the Economics of Developing Countries

2. Carbaugh, Chap. 18 2 Economic Systems Role of government in a mixed economy Product markets Business firms Government interventions: - minimum wage law - collective bargaining legislation - worker health & safety regulations - anti-discrimination legislation Households Government interventions: - household income taxes - public welfare programs - job retraining programs Government interventions: - laws promoting competition - business taxes and subsidies - public utility regulation Government interventions: - purchases of goods and services - trade barriers protecting domestic firms and workers - product safety laws protecting consumers Resource markets

3. Carbaugh, Chap. 18 3 Basic economic & social indicators for selected nations, 2000 Developing Countries United States$30,60078<5% Switzerland27,28678 <5 Japan24,04180 <5 Sweden20,82479 <5 Chile8,370755 Malaysia7,9637215 Mexico7,7197210 Algeria4,7537036 Indonesia2,4396521 Guinea1,7614676 Chad8164852 Mozambique7974659 GNPLife expectancyAdult per capita *(years)illiteracy (%) Source: World Bank, World Development Report * Gross National Product per capita measured at purchasing power parity.

4. Carbaugh, Chap. 18 4 Structure of output for selected advanced and developing nations, 2000 Developing Country Trade Problems Advanced nations United States22672 Japan237 61 Canada438 58 France226 72 Italy33166 Developing nations Albania542521 Chad381448 Pakistan262549 Tanzania481438 Mali471736 Agriculture, forestry & fishingIndustryServices Source: World Bank, World Development Report Value Added as a Percent of GDP

5. Carbaugh, Chap. 18 5 Developing nations: dependence on primary products (2000) Developing Country Trade Problems Major exportAs % of Countryproducttotal exports NigeriaOil96 Saudi ArabiaOil86 VenezuelaOil86 BurundiCoffee79 Mauritania Iron ore56 ZambiaCopper56 EthiopiaCoffee54 ChadCotton40 RwandaCoffee31 Source: World Bank, Country Data

6. Carbaugh, Chap. 18 6 Economic performance of developing nations by trade orientation, 1963-92 (World Bank, 1987; OECD, 1998) Growth strategies Avg. annual % growth of real GDP -2 0 1 2 3 4 5 6 7 1963-731974-851986-92 Percent Strongly outward-oriented Moderately outward-oriented Moderately inward-oriented Strongly inward-oriented