O the mix and severity of these challenges largely

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o The mix and severity of these challenges largely set the development constraints and policy priorities of a developing nation. Lower Levels of Living and Productivity: o All countries with averages below what is defined as high income are considered developing in most taxonomies. o The vicious cycle of poverty: At very low income levels, low income may lead to low investment in education and health as well as plant and equipment and infrastructure, which in turn leads to low productivity and economic stagnation. This has been referred to as the poverty trap or by Nobel laureate Gunnar Myrdal as “circular and cumulative causation”. o There is no necessary correlation between country size in population or area and economic development. Lower Levels of Human capital o Human capital includes health, education and skills
o It is vital to a countries present and future economic growth and development Higher Levels of Inequality and Absolute Poverty: o The magnitude and extent of poverty in any country depend on two factors: the average level of national income and the degree of inequality in its distribution. The more unequal the distribution, the greater the incidence of poverty The lower the average income level, the greater the incidence of poverty o Therefore it is also necessary to look at the gap between rich and poor within individual LDCs (we cannot confine our attention to averages) o Inequality is often higher in developing countries than developed o This is particularly the case in many resource-rich developing countries o Hence inequality varies greatly among developing countries, with generally lower inequality in Asia o Other: Absolute poverty = a specific minimum level of income needed to satisfy basic physical needs. Most of the reduction in extreme poverty in recent years has occurred in East Asia Not only do poverty and inequality result in distorted growth, but they can also be a cause of it. Higher Population Growth Rates: o There is a very wide range of crude birth rates around the world (births per 1000 population), however in general developing countries have a much higher birth rate than developed countries, which often have birth rates near or even below replacement o Developing countries also contend with greater dependency burdens than rich nations: Both older people and children are often referred to as an economic dependency burden: The overall dependency burden represents about one-third of the populations of developed countries but almost 40% of the populations of the less developed nations This means that the active labour force has to support proportionally more people in developing countries o Facts: More than five-sixths of all the people in the world now live in the developing world
Children under age 15 make up 32% of the developing countries, 17% of developing countries Greater Social Fractionalization: o Developing nations face a variety of governance challenges o

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