Economic Development and Transition

1
Economic Development and Transition

• Chapter 18

2
Levels of Development

• Chapter 18, Section 1

3
Levels of Development

• ½ the world lives in poverty
• Economic well-being is measured in terms of
  development
• the process by which a nation improves economic,
  political and social well-being of its people

4
Developed Nations and LDCs

• Developed nations are nations with a higher level
  of material well being
• LDCs (L4ss Developed Countries) or LDNs (Less
  Developed Nations) are those with low economic
  well being
• Mexico, Nepal, Central and Southern Africa,
  Republics of the former Soviet Union

5
Measuring Development

• Factors used in measuring development
• Life expectancy
• Infant mortality
• Health care
• Literacy
• Labor force
• Consumer goods
• Infrastructure
• Energy consumption
• Per Capita GDP

6
Issues of Development

• Chapter 18, Section 2

7
Issues of Development

• Population growth
• Countries are increasing population without
  increasing their economy or development
• Lack Factors of Production
• Land, Physical Capital, Human Capital
• Brain Drainskilled people moved to more
  developed nations
• Political Factors
• Corrupt governments, instability, debt

8
Financing Development

• Chapter 18, Section 3

9
Developing Countries Need to Raise Financing

• Internal financingsavings and investing from
  within
• LDCs dont have a lot of people who can do this.
• Foreign investment
• Foreign directbuilding in the nationdone by
  MNCs
• Foreign portfolioinvesting in stocks and bonds
  of foreign countries

10
Foreign Aid

• Some nations give aid (not loans) to LDCs for
  varied reasons
• Political
• Economic
• Human compassion
• World Bank
• Institution that raises money to distribute to
  nations of need
• Coordinates economic development throughout the
  world

11
International Monetary Fund (IMF)

• Aids desperate countries through debt
  rescheduling and stabilization programs
• Conditions are set by the IMF

12
Transitions to Free Enterprise

• Chapter 18, Section 4

13
Moving Towards a Market Economy

• Privatizationsale and transfer of government
  owned businesses to individuals
• Property rights need to be protected

14
Transitions in Nations

• Russia and Glasnost
• Policy of political openness and reform that
  encouraged citizens to say what they wished
  without persecution
• Perestroikaplan for transition from command to
  free economy
• China and the Great Leap Forward
• Plan for China to turn into an economic power
• All land was taken over by the government
• Huge disaster as there was no incentive
• China now blends free markets and command ideals
  for their economic plan