Chapter Comparative Economic Development Copyright © 2009 Pearson Addison-Wesley All rights reserved Country Classifications World Bank ranks countries on GNI per capita • Low Income Countries (LIC) • Low Middle Income Countries (LMC) • Upper Middle Income Countries (UMC) • High Income Countries (HIC) • Organization for Economic Cooperation and Development (OECD) Copyright © 2009 Pearson AddisonWesley All rights reserved 2-2 Classification of Economies by Region and Income in 2007 Copyright © 2009 Pearson AddisonWesley All rights reserved 2-3 Classification of Economies by Region and Income, 2007 (Latin America and the Caribbean) Copyright © 2009 Pearson AddisonWesley All rights reserved (Sub-Saharan Africa) 2-4 Classification of Economies by Region and Income, 2007 Copyright © 2009 Pearson AddisonWesley All rights reserved 2-5 Nations of the World, Classified by GNI Per Capita Copyright © 2009 Pearson AddisonWesley All rights reserved 2-6 Measuring Development • Gross National Income (GNI) • Gross Domestic Product (GDP) • Purchasing Power Parity (PPI): method instead of exchange rates as conversion factors Copyright © 2009 Pearson AddisonWesley All rights reserved 2-7 Income Per Capita in Selected Countries Copyright © 2009 Pearson AddisonWesley All rights reserved 2-8 Comparison of Per Capita GNI, 2005 Copyright © 2009 Pearson AddisonWesley All rights reserved 2-9 Basic Indicators of Development • Health Conditions • Life Expectancy • Education Achievements • Human Development Index (HDI): a composite measure of living standards Copyright © 2009 Pearson AddisonWesley All rights reserved 2-10 Most and Least Populated Countries and Their Per Capita Income, 2005 Copyright © 2009 Pearson AddisonWesley All rights reserved 2-19 Child Mortality Rates, 1990 and 2005 Copyright © 2009 Pearson AddisonWesley All rights reserved 2-20 Primary School Enrollment and Pupil-Teacher Ratio Copyright © 2009 Pearson AddisonWesley All rights reserved 2-21 Correlation between Child Mortality and Mother’s Education Copyright © 2009 Pearson AddisonWesley All rights reserved 2-22 People Living in Poverty, 1981-2002 Copyright © 2009 Pearson AddisonWesley All rights reserved 2-23 Common Characteristics of LDCs: Greater social fractionalization Larger rural population, but rapid rural-urban migration Lower levels of industrialization and manufactured exports Adverse geography and resource endowment Copyright © 2009 Pearson AddisonWesley All rights reserved 2-24 Urban Population in LDCs Copyright © 2009 Pearson AddisonWesley All rights reserved 2-25 Share of Population Employed in Industry 2000-2005 (%) Copyright © 2009 Pearson AddisonWesley All rights reserved 2-26 Common Characteristics of LDCs: Underdeveloped financial and other markets – Imperfect markets – Incomplete information 10 Colonial legacy and external dependence – – – – Institutions Private property Personal taxation Taxes in cash rather than in kind Copyright © 2009 Pearson AddisonWesley All rights reserved 2-27 LDCs Today vs MDCs Then Physical and human resource endowments Per capita incomes and levels of GDP Climate Population size, distribution, and growth Copyright © 2009 Pearson AddisonWesley All rights reserved 2-28 LDCs Today vs MDCs Then Historic role of international migration International trade benefits Scientific innovation & technological advancement Effectiveness of domestic institutions Copyright © 2009 Pearson AddisonWesley All rights reserved 2-29 Convergence? • The closing economic and technological gaps between LDCs and MDCs? • Evidence of unconditional convergence is hard to find • Per capita income convergence? Copyright © 2009 Pearson AddisonWesley All rights reserved 2-30 Convergence in OECD Divergence in the World Copyright © 2009 Pearson AddisonWesley All rights reserved 2-31 Per Capita GDP Growth in LDCs, 1995-2005 Copyright © 2009 Pearson AddisonWesley All rights reserved 2-32 Growth Convergence and Income Convergence Copyright © 2009 Pearson AddisonWesley All rights reserved 2-33 ... Cooperation and Development (OECD) Copyright © 2009 Pearson AddisonWesley All rights reserved 2-2 Classification of Economies by Region and Income in 2007 Copyright © 2009 Pearson AddisonWesley All... Expectancy • Education Achievements • Human Development Index (HDI): a composite measure of living standards Copyright © 2009 Pearson AddisonWesley All rights reserved 2-10 Commonality and Diversity:... Copyright © 2009 Pearson AddisonWesley All rights reserved 2-19 Child Mortality Rates, 1990 and 2005 Copyright © 2009 Pearson AddisonWesley All rights reserved 2-20 Primary School Enrollment and