Chapter 2 Characteristics of Developing Countries.ppt
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This document outlines common characteristics of developing countries compared to developed countries. Some key characteristics include lower levels of living and productivity, lower levels of human capital, higher levels of inequality and poverty, higher population growth rates, larger rural populations undergoing rapid urbanization, lower levels of industrialization and manufactured exports, underdeveloped financial and other markets, and impacts from colonial legacies like poor institutions. The World Bank classifies countries based on income levels, with developing countries having lower GNI per capita on average. There is diversity within developing countries but also common challenges.
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1) Traditional society characterized by subsistence farming and barter
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2. It uses the capital-output ratio and investment ratio to determine the rate of economic growth.
3. Harrod identified the actual, warranted, and natural rates of growth and argued stability requires equality between these rates.
4. The warranted rate depends on capital-output ratio and savings ratio matching the demand and supply of capital.
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Lewis model
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- Mercantilism developed between the 16th-18th centuries in Western Europe as the nation state rose and feudalism declined. It was influenced by changes in technology, the Black Death pandemic, and influxes of New World gold and silver.
- Major tenets included using economic policy as a way to increase state power, promoting domestic production and exports over imports, and obtaining trade surpluses to bring gold
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