1. Lecture 3 Characteristics of the Developing World: Diversity within Commonality Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-1

2. Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-2 10 Characteristics of the Developing World: Diversity within Commonality 1. Lower levels of living and productivity 2. Lower levels of human capital (health, education, skills) 3. Higher Levels of Inequality and Absolute Poverty – Absolute Poverty – World Poverty 4. Higher Population Growth Rates – Crude Birth rates

3. Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-3 Figure 2.4 Shares of Global Income, 2005

4. Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-4 Table 2.6 The 12 Most and Least Populated Countries and Their Per Capita Income, 2005

5. Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-5 Figure 2.5 Under-5 Mortality Rates, 1990 and 2005

6. Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-6 Table 2.7 Primary School Enrollment and Pupil-Teacher Ratios

7. Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-7 Figure 2.6 Correlation between Under- 5 Mortality and Mother’s Education

8. Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-8 Figure 2.7 People Living in Poverty, 1981-2002

9. Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-9 Table 2.8 Crude Birth Rates Around the World, 2005

10. Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-10 10 Characteristics of the Developing World: Diversity within Commonality 5. Greater Social Fractionalization 6. larger Rural Populations but Rapid Rural- to-Urban Migration 7. Lower levels of Industrialization and Manufactured Exports 8. Adverse Geography – Resource endowments

11. Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-11 Table 2.9 The Urban Population in Developed Countries and Developing Regions

12. Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-12 Table 2.10 Share of the Population Employed in the Industrial Sector in Selected Countries, 2000-2005 (%)

13. Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-13 10 Characteristics of the Developing World: Diversity within Commonality 9. Underdeveloped Financial and Other markets – Imperfect markets – Incomplete information 10. Colonial Legacy and external dependence – Institutions – Private property – Personal taxation – Taxes in cash rather than in kind

14. Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-14 Low Income Countries Today And Developed Countries Then Eight differences – Physical and human resource endowments – Per capita incomes and levels of GDP – Climate – Population size, distribution, and growth – Historic role of international migration – International trade benefits – Scientific/technological research – Efficacy of domestic institutions

15. Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-15 Convergence? Evidence of unconditional convergence is hard to find Per capita income convergence?

16. Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-16 Figure 2.8 Convergence among OECD Countries but Divergence in the World as a Whole

17. Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-17 Figure 2.9 Per Capita GDP Growth in 125 Developing Countries, 1995-2005

18. Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-18 Figure 2.10 Growth Convergence and Absolute Income Convergence

19. Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-19 Long-Run causes of Comparative Development Schematic Representation – Geography – Institutional quality- colonial and post-colonial – Colonial legacy- pre colonial comparative advantage – Evolution and timing of European development – Inequality- human capital – Type of colonial regime

20. Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-20 Figure 2.11 Schematic Representation of Leading Theories of Comparative Development

21. Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-21 Case Study: Pakistan

22. GDP GDP (PPP): $514.6 billion (2012 est.) country comparison to the world: 28 $496.3 billion (2011 est.) $481.7 billion (2010 est.) note: data are in 2012 US dollars GDP (official exchange rate): $230.5 billion (2012 est.) Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-22

23. GDP GDP - real growth rate: 3.7% (2012 est.) country comparison to the world: 93 3% (2011 est.) 3.1% (2010 est.) GDP - per capita (PPP): $2,900 (2012 est.) country comparison to the world: 175 $2,800 (2011 est.) Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-23

24. GDP GDP - composition by sector: agriculture: 20.1% industry: 25.5% services: 54.4% (2012 est.) Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-24

25. Labor Labor force: 60.36 million country comparison to the world: 10 Labor force - by occupation:agriculture: 45.1%, industry: 20.7%, services: 34.2% Unemployment rate: 5.6% (2012 est.) country comparison to the world: 55 5.6% (2011 est.) Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-25

26. Poverty and Inequality Population below poverty line: 22.3% (FY05/06 est.) Household income or consumption by percentage share: lowest 10%: 9.9% highest 10%: 39.3% (FY07/08) country comparison to the world: 114 Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-26

27. Investment Investment (gross fixed): 10.9% of GDP (2012 est.) country comparison to the world: 146 Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-27

28. Budget revenues: $29.51 billion expenditures: $44.19 billion (2012 est.) Taxes and other revenues: 12.8% of GDP country comparison to the world: 201 Budget surplus (+) or deficit (-): -6.4% of GDP (2012 est.) country comparison to the world: 179 Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-28

29. Public Debt and Inflation Public debt: 50.4% of GDP (2012 est.) country comparison to the world: 62 60.1% of GDP (2011 est.) Inflation rate (consumer prices): 11.3% country comparison to the world: 201 11.9% (2011 est.) Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-29

30. Production Agriculture - products: cotton, wheat, rice, sugarcane, fruits, vegetables; milk, beef, mutton, eggs Industries: textiles and apparel, food processing, pharmaceuticals, construction materials, paper products, fertilizer, shrimp Industrial production growth rate: 3% country comparison to the world: 102 Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-30

31. Current Account Balance Current account balance: -$4.632 billion country comparison to the world: 163 $268 million (2011 est.) Exports: $24.66 billion (2012 est.) country comparison to the world: 71 $26.3 billion (2011 est.) Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-31

32. Exports Exports - commodities: textiles (garments, bed linen, cotton cloth, yarn), rice, leather goods, sports goods, chemicals, manufactures, carpets and rugs Exports - partners: US 15%, UAE 9.7%, Afghanistan 9.5%, China 9.2%, UK 5%, Germany 4.5% (2012 est.) Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-32

33. Imports Imports: $40.82 billion (2012 est.) country comparison to the world: 61 $38.93 billion (2011 est.) Imports - commodities: petroleum, petroleum products, machinery, plastics, transportation equipment, edible oils, paper and paperboard, iron and steel, tea Imports - partners: UAE 17.2%, China 15%, Saudi Arabia 11.2%, Kuwait 8.9%, Malaysia 5.4%, Japan 4.3% Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-33

34. Reserves Reserves of foreign exchange and gold: $13.5 billion (30 November 2012 est.) country comparison to the world: 68 $18.09 billion (31 December 2011 est.) Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-34

35. Debt Debt - external: $55.98 billion (31 December 2012 est.) country comparison to the world: 57 $58.27 billion (31 December 2011 est.) Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-35

36. Exchange rates Exchange rates: Pakistani rupees (PKR) per US dollar - 95.1 (2012 est.) 86.3434 (2011 est.) 85.194 (2010 est.) 81.71 (2009) 70.64 (2008) Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-36

37. Ethnic groups Punjabi 44.68%, Pashtun (Pathan) 15.42%, Sindhi 14.1%, Sariaki 8.38%, Muhajirs 7.57%, Balochi 3.57%, other 6.28% Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-37

38. Population and Age Stucture Population: 190,291,129 (July 2012 est.) country comparison to the world: 6 Age structure: 0-14 years: 34.7% (male 33,941,828/female 32,130,001) 15-24 years: 21.7% (male 21,283,907/female 19,951,750) 25-54 years: 34.5% (male 34,171,096/female 31,564,622) 55-64 years: 4.8% (male 4,539,939/female 4,633,292) 65 years and over: 4.2% (male 3,808,536/female 4,266,158) (2012 est.) Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-38

39. Population Population growth rate: 1.551% (2012 est.) country comparison to the world: 77 Birth rate: 24.3 births/1,000 population (2012 est.) country comparison to the world: 65 Death rate: 6.8 deaths/1,000 population (July 2012 est.) country comparison to the world: 138 Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-39

40. Mortality Rates Maternal mortality rate: 260 deaths/100,000 live births (2010) country comparison to the world: 43 Infant mortality rate: total: 61.27 deaths/1,000 live births country comparison to the world: 25 Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-40

41. Life Expectancy Life expectancy at birth: total population: 66.35 years country comparison to the world: 166 male: 64.52 years female: 68.28 years (2012 est.) Total fertility rate: 3.07 children born/woman country comparison to the world: 59 Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-41

42. Health Health expenditures: 2.6% of GDP (2009) country comparison to the world: 182 Physicians density: 0.813 physicians/1,000 population (2009) Hospital bed density: 0.6 beds/1,000 population (2009) Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-42

43. Sanitation Facility Sanitation facility access: improved: urban: 72% of population rural: 29% of population total: 45% of population Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-43

44. Education Education expenditures: 2.7% of GDP (2009) country comparison to the world: 142 Literacy: definition: age 15 and over can read and write total population: 54.9% male: 68.6%, female: 40.3% (2009 est.) School life expectancy (primary to tertiary education): total: 7 years male: 8 years, female: 6 years (2009) Copyright © 2009 Pearson Addison-Wesley. All rights reserved. 2-44