[go: up one dir, main page]
Scribd
Upload
227 views22 pages

Economic Challenges for Developing Nations

The document discusses differences in economic development between countries. It identifies several factors that contribute to these differences, including differences in income, savings, investment, population growth, education, industry composition, and export concentration. Countries can get trapped in a cycle of poverty where low incomes lead to low savings, investment, and productivity, perpetuating poverty. However, higher productivity could also lead to increasing incomes, savings, investment, and further productivity gains, creating a cycle of economic growth. Developing countries face challenges such as high population growth, debt, reliance on primary exports, underinvestment in human capital and infrastructure, and restrictions on their trade.

Uploaded by

andrew.collanan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
227 views22 pages

Economic Challenges for Developing Nations

The document discusses differences in economic development between countries. It identifies several factors that contribute to these differences, including differences in income, savings, investment, population growth, education, industry composition, and export concentration. Countries can get trapped in a cycle of poverty where low incomes lead to low savings, investment, and productivity, perpetuating poverty. However, higher productivity could also lead to increasing incomes, savings, investment, and further productivity gains, creating a cycle of economic growth. Developing countries face challenges such as high population growth, debt, reliance on primary exports, underinvestment in human capital and infrastructure, and restrictions on their trade.

Uploaded by

andrew.collanan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 22

Economic Development

Differences in Economic Development


between Countries
Categorising Economic Development
Countries with high GDP/head usually have high living standards and rank
well in other metrics for economic development, however this is not always
the case.

Using a measure like the Human Development Index (HDI) is a good way to
compare economic development as it takes into account multiple factors.

The United Nations measures economic development using the HDI.


Causes of Differences in Economic Development
between Countries
There are lots of factors that determine the differences in economic development
between countries.

● Differences in incomes per head


● Differences in saving due to differences in income per head
● Differences in investment
● Differences in population growth
● Differences in education and healthcare
● Differences in the size of the primary, secondary and tertiary sectors
● Differences in the concentration on a narrow range of exports (most of which
are primary products).
● Differences in productivity
The Cycle of Poverty
The causes of differences in economic
development are interrelated. Countries
can be subject to what is known as the
under-development trap or the vicious
circle of poverty. One problem is that a
country with low incomes has a low saving
rate. This means that most of their
resources are used to produce consumer
goods. The lack of capital goods keeps
productivity and income low.
Cycle of Economic Development
One thing to bear in mind is that this
poverty cycle could operate in a
positive manner.

Higher productivity could lead to


higher incomes which could lead to
higher savings which could lead to
higher investment which could lead to
higher productivity…
Hard choices for developing countries
Do developing countries want goods
today or more goods in the future?

We sometimes call the basic amount


of goods requires to survive the
sustenance level.

The issue for developing countries is


that almost all production needs to go
into consumer goods to maintain this
sustenance level.
Hard choices for developing countries

Developing countries still need to


maintain some capital production to
account for capital consumption
(depreciation).
What are some issues that developing countries face?

● High growth of population


● High levels of international debt
● Reliance on the export of primary products
● Lack of investment in human capital and capital goods
● Emigration of key workers
● Trade restrictions on their products
● Unbalanced economies
Task
In groups, come up with some ideas about how
developing countries can overcome the issues that they
face.
Extension - why might some economists disagree on the
best ways to overcome these issues?
How can developing countries solve their issues
One way is to invite Multinational Corporations (MNCs) into the
country. This will bring lots of employment opportunities and
investment.

You might also like