developed vs developing countries syllabus outcomes: distinguish between developed, developing, less...
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DEVELOPED VS DEVELOPING COUNTRIES
Syllabus Outcomes:
•Distinguish between developed, developing, less developed countries•Explain using examples that economically less developed countries share certain characteristics including: low levels of GDP per capita, high levels of poverty, large agricultural sector, large urban informal sectors and high birth rates.
Developed vs developing countries
World bank divided countries into 4 groups based on GNI (GDP) per capita
Types of Countries
Low income countries GNI = <
$975
Lower middle
income GNI = $976 to
$ 3855
Upper middle income GNI =
$3856 to $11905
More developed countries = $ 11906
Less developed countries More developed countries
Characteristics of developing countries
Watch you tube video http://www.youtube.com/watch?v=p4FERTJHjD4&list=PL5E59472ABA76E134
Characteristics of developing countries
1. Low levels of GDP per capita 2. High levels of poverty (< $1 per day)3. Large agricultural sector4. Large urban informal market (illegal market)5. High birth rates and population growth6. Low levels of health and education7. Low levels of productivity8. Dual economies
Formal Vs Informal Markets
Formal markets – part of the economy that is registered and legal.
Informal market – part of the economy that is unregistered, illegal and unregulated.includes jobs such as: barbers, drivers, carpenters, drycleaners, hotel workers, street sellers.
Informal markets and developing countries
Informal market is more common in less developed countries is not due to tax evasion or illegal activities instead its due to:
Urbanisation Increased population Recession
Reasons for growth of informal markets
1. Government policy failure ( 50’s/60’s)focusing on manufacturing and neglected agriculture
2. Less job opportunity and incomes in rural areas.
3. Migration from rural to urban areas4. Population growth5. Less job opportunities in the formal sector in
the city areas6. Sector attracts migrants, uneducated, and
low skills workers
Problems with informal market
Limited worker protectionVulnerable to exploitationEnvironmental dangersHealth hazards in slums with no basic
servicesNo access to credit for workersLimited opportunities for education and
training
Possible benefits of informal markets
Opportunities for employment in countries that cannot create formal employment
Government can take advantage of this opportunities and assist this sector to become formal by:
give access to credit – so businesses can expand and grow
provide training and educationProvide needed infrastructure and services
Problems of high birth rates
High birth rates high population growth
85% of world population live in developing countries
birth rates falling everywhere but rising in LDC.
Dependency ratio very high – % of economically dependent people (children & elderly) those who cannot work. ( in LDC = 85% vs MDC = 49%)
High dependency ratio income must be stretched to support more members in the family. Big problem if income very low.
Implications of high birth rates
1. Huge burden on LDC to absorb growing no people to :
Create Employment Avoid pressure on environmentImprove health +education +
infrastructureImprove SOL for poor
Implications of high birth rates
2. Slow down in economic growth & devp because:
Rapid population growth require an even more rapid output and income growth in order for per capita income and output to increase
high dependency rate – less income per person – push into poverty
Poor health of mothers due to frequent birthEnvironmental degradation – affect the poor
Impacts of Dual Economy
Dual EconomyWealthy/ highly educated people poor illiterate people
Formal informal urban sector
High productivity industrial sector low productivity traditional sector
low productivity agricultural rural sector
high productivity industrial urban sector
A modern commercial agricultural sector
traditional subsistence agricultural sector
A dual economy arise when there are 2 sets of circumstances that exist simultaneously .
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