Ch_2 - Lecture Note Chapter 2 - Comparative Economic...

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Unformatted text preview: Lecture Note Chapter 2 - Comparative Economic Development University of Waterloo Department of Economics Fall 2011 Topics Covered Defining the developing world. Quantitative comparison methods:- International comparison of income based on exchange rate and PPP conversion method.- Human Development Index (HDI). Characteristics of developing world. Extreme contrasts between developed and developing countries and between different developing countries. Defining the Developing World There is no universally accepted definition of less developed countries (LDCs). Therefore, in attempting to define LDCs, it would be helpful to have an acceptable measure of development. The most common way to define the developing world is by per capita income. Defining the Developing World In the past, the preferred measure of development was the income per capita (in US dollars). In recent years, a consensus has been gathering around the HDI as a preferred measure of development. Defining the Developing World In this section, we examine two approaches to summarizing development levels across countries: real income per capita adjusted for purchasing power and the Human Development Index , a measure that equally weights average income, health, and educational attainments. Real income per capita approach 210 economies with a population of at least 30,000 are ranked by their levels of GNI per capita. Defining the Developing World World Bank Scheme- ranks countries on GNP (or GNI) per capita Low-income countries (LICs) are defined by the World Bank as having a per capita gross national income in 2008 of $975 or less; lower-middle-income countries (LMCs) have incomes between $976 and $3,855; upper- middle-income countries (UMCs) have incomes between $3,856 and $11,906; and high-income OECD countries have incomes of $11,907 or more. Defining the Developing World Other high income countries high income countries that has one or more highly developed export sectors. Sometimes a special distinction is made between upper middle income countries and newly high income countries (NICs) with relatively sophisticated manufacturing sectors. UN classification according to a nations indebtedness severely indebted, moderately indebted and less indebted. Defining the Developing World Least developed countries A United Nations designation based on low income, low human capital and high economic vulnerability. As of 2010, there are 49 countries considered least developed countries. 33 of them are from Africa and 15 from Asia plus Haiti. Other special UN classifications include landlocked developing countries sand small island developing states. Defining the Developing World In 2008, the total national income of all the nations of the world was valued at more than U.S. $58 trillion , of which almost $48 trillion originated in the economically developed high- income regions, and less than $16 trillion was...
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Ch_2 - Lecture Note Chapter 2 - Comparative Economic...

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