Chapter 2.docx - ECO2117 L2 1 Chapter 2 Comparative...

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ECO2117 L2 1 Chapter 2: Comparative Economic Development - In this chapter we present the commonalities and differences among developing countries - Consider key differences between conditions in today’s developing countries and those in now-developed countries at an early stage of their development - Examine the controversy over whether developing and developed countries are now converging in their level of development - We clarify why and how such an equal world remains so persistently unequal - We shed light on the positive factors behind recent rapid progress in a significant portion of the developing world - The developing world has made substantial economic development progress in recent years. However, disparities still persist. - Output per worker in the United States (around $48,820) is about 10 times higher than in India (around $3,640) and more than 100 times higher than in Democratic Republic of Congo (DRC) (around $340). - There are also enormous gaps in measures of welfare - Life expectancy is 79 in the US, 65 in India, and just 48 in DRC - The percent of underweight children is less than 3% in the US but 43% in India and 24% in DRC. - Practically all US women are literate while just 51% are in India and 57% in DRC - •How have such large gaps managed to persist and even widen? - •Why have some developing countries made so much progress in closing these gaps while others have made so little? - •This chapter introduces the study of comparative economic development Defining the Developing World World Bank Scheme: ranks countries on GNP/capita - LICs: Low income countries ($1,025 or less) - LMCs: Lower-middle-income countries (between $1,026 and $4,035) - UMCs: upper-middle-income countries (between $4,036 and $12,475) - High-income Organization for Economic Cooperation and Development (OECD) countries ($12,476 or more) - Other high-income countries Developing countries are those with low-, lower-middle, or upper-middle income (LIC,LMC,UMC). Basic Indicators of Development: Real Income, Health, and Education
ECO2117 L2 2 Gross National Income (GNI) - The total domestic and foreign output claimed by residents of a country, consisting of gross domestic product (GDP) plus incomes earned by foreign residents, minus income earned in the domestic economy by non-residents Gross Domestic Product (GDP) - The total final output of goods and services produced by the country’s economy within the country’s territory by residents and non-residents, regardless of allocation between domestic and foreign claims Purchasing power parity (PPP) - Calculation of GNI using a common set of international prices for all goods and services, to provide more accurate comparisons of living standards - Overall, the average real (PPP) in high-income countries is more than 28 times that in low-income countries and 5 times higher than in middle-income countries.

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