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Unformatted text preview: It is difficult for those of us in the United States, where per capita GDP in 2007 was about $47,000, to grasp the fact that about 2.6 billion people, or nearly half the world population, live on $2 or less a day. And about 1 billion live on less than $1 a day. Hunger, squalor, and disease are the norm in many nations of the world. In this bonus Web chapter we identify the developing countries, discuss their characteristics, and explore the obstacles that have impeded their growth. We also examine the appropriate roles of the private sector and government in economic development. Finally, we look at policies that might help developing countries increase their growth rates. The Economics of Developing Countries IN THIS CHAPTER YOU WILL LEARN: 1 How the World Bank distinguishes between industrial advanced countries (high-income nations) and developing countries (middle- income and low-income nations). 2 Some of the obstacles to economic development. 3 About the vicious circle of poverty that affl icts low-income nations. 4 The role of government in promoting economic development within low-income nations. 5 How industrial nations attempt to aid low-income countries. B o n u s W e b C h a p t e r WEB w w w . m c c o n n e l l 1 8 e . c o m 39 39W-1 CHAPTER 39W The Economics of Developing Countries 39W-2 The Rich and the Poor Just as there is considerable income inequality among fam- ilies within a nation, so too is there great income inequality among the family of nations. According to the United Nations, the richest 20 percent of the world’s population receive more than 80 percent of the world’s income; the poorest 20 percent receive less than 2 percent. The poor- est 60 percent receive less than 6 percent of the world’s income. Classifi cations The World Bank classifies countries into high-income, medium-income, and low-income countries on the basis of national income per capita, as shown in Figure 39W.1 . The high-income nations, shown in gold, are known as the industrially advanced countries (IACs) ; they include the United States, Japan, Canada, Australia, New Zealand, and most of the nations of western Europe. In general, these nations have well-developed market economies based on large stocks of capital goods, advanced production tech- nologies, and well-educated workers. In 2006 these econo- mies had a per capita income of $36,608. The remaining nations of the world are called devel- oping countries (DVCs) . They have wide variations of income per capita and are mainly located in Africa, Asia, and Latin America. The DVCs are a diverse group that can be subdivided into two groups: • The middle-income nations, shown in green in Figure 39W.1 , include such countries as Brazil, Iran, Poland, Russia, South Africa, and Thailand. Per capita output of these middle-income nations ranged from $906 to $11,115 in 2006 and averaged $3056....
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This note was uploaded on 10/06/2010 for the course ECO 2013 taught by Professor Haroldj.vanboven during the Fall '09 term at Edison State College.
- Fall '09