Scribd
Upload
2 views15 pages

35_Differences_in_economic_development_between_countries-1

Economic development is defined as an increase in a country's standard of living, encompassing poverty reduction and improvements in health and education. Differences in economic development among countries are influenced by factors such as income levels, productivity, population growth, sector composition, savings and investments, education, and healthcare quality. LEDCs often face challenges like low national income, high population growth, and limited access to technology, which hinder their economic progress.

Uploaded by

itsmedude205
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
2 views15 pages

35_Differences_in_economic_development_between_countries-1

Economic development is defined as an increase in a country's standard of living, encompassing poverty reduction and improvements in health and education. Differences in economic development among countries are influenced by factors such as income levels, productivity, population growth, sector composition, savings and investments, education, and healthcare quality. LEDCs often face challenges like low national income, high population growth, and limited access to technology, which hinder their economic progress.

Uploaded by

itsmedude205
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 15

CH35 Differences in economic

development between
countries
What is economic development?

Economic development refers to an increase in the


standard of living within a country.
This includes a reduction in poverty and income
inequalities, and an increase in health, education.
Factors accounting for differences in economic development
Differences in income

● Higher National Income (Real GDP per Capita) generally correlates with
greater Economic Development and a higher Standard of Living
● LEDCs (Less Economically Developed Countries) often have low national
income per head, high birth rates, and extreme poverty (1.2 billion people
globally)
● Income Distribution: Higher real GDP per head does not always lead to a
higher standard of living due to income inequalities.
● The Composition of GDP matters: more spending on areas like defense may
boost GDP but not necessarily development
● Negative Consequences of Economic Growth: Economic growth can lead to
pollution, climate change, and environmental damage.
Factors accounting for differences in economic development
Differences in Productivity
● Productivity Differences: Economic development varies across countries due to
differences in productivity levels. Low-income countries often lack access to the latest
technologies and automated production systems, which can hinder their economic
development.
● Natural Resources: The quantity and quality of natural resources differ across
countries. Countries with abundant resources, like Angola's oil and mineral reserves,
have an advantage. However, many LEDCs rely on exports of cheap agricultural
products, which can limit their development.
● Foreign Direct Investment (FDI): Countries that attract FDI typically experience higher
productivity levels. FDI can increase the quantity and quality of physical capital in an
economy, boosting its productive capacity and competitiveness. This can lead to job
creation and further economic development.
Factors accounting for differences in economic development
Differences in population growth
● High population growth can hinder economic development due
to competing pressures on scarce resources like agricultural
land.
● Some LEDCs like Niger, Rwanda, Bangladesh, and Ethiopia have
large or fast-growing populations, which tends to reduce their
GDP per capita, limiting their economic development.
● Other LEDCs, such as Mali and Burkina Faso, do not have
fast-growing populations.
Factors accounting for differences in economic development
Differences in size of primary, secondary and tertiary sectors
● Primary Sector: Involves extraction of raw materials and natural resources.
Dominates in terms of output and employment in LEDCs.
● Secondary Sector: Involves manufacturing, using natural resources to produce
man-made resources. Predominant in most industrialising and developing countries.
● Tertiary Sector: Refers to the provision of services. Most important in high-income
economies.
● Economic Development: As an economy develops, there’s a shift from reliance on
primary and secondary sectors towards tertiary output. Countries with low GDP per
capita are at early stages of development, with most people working in the primary
sector. As these countries advance, the majority of their GDP is generated from the
secondary sector. In economically developed countries with high income per capita,
the tertiary sector accounts for the largest share of employment and GDP.
Factors accounting for differences in economic development
Differences in savings and investments
● Savings are crucial for banks to have sufficient funds to lend to firms for investment
purposes.
● People in LEDCs often struggle to save due to limited income, while those in MEDCs
are generally able to save.
● Firms borrow these savings via financial lenders like banks to fund their
investments. Increased savings lead to more investments, contributing to economic
development.
● Some countries require institutional changes in banking, legal, and political systems
to facilitate economic transactions.
● These changes are necessary to ease international trade, attract Foreign Direct
Investment (FDI), and enhance consumer and business confidence.
Factors accounting for differences in economic development
Differences in education

● The level of education in a country is an indicator of its


economic development.
● Economists measure the mean (average) years of
schooling and adult literacy rates in different countries
for this purpose.
● In general, the greater the level of education in a
country, the higher its standard of living tends to be.
Factors accounting for differences in economic
development
Differences in education
Factors accounting for differences in economic development
Differences in healthcare
● The quality of healthcare directly influences the social and
economic wellbeing of a country.
● Key measures of healthcare quality include:
○ Life expectancy at birth: The average lifespan of a person in
the country.
○ Healthcare expenditure: The annual spending on healthcare
as a percentage of the country’s GDP.
○ Child mortality rates: The number of deaths of children aged 5
and below, per thousand of the population.
Factors accounting for differences in economic
development
Handout activity

You might also like