Bài giảng MicroEconomics - Chapter 039W: The Economics Of Developing Countries

The EconomicsOf DevelopingCountriesChapter 39WMcGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.Chapter ObjectivesDistinguishing between industrial advanced countries and developing countriesObstacles to economic development The vicious circle of poverty The role of government in promoting economic developmentIndustrial nation’s attempts to aid low-income countries39-2Country ClassificationsIndustrially advanced countriesHigh income nationsWell-developed market economiesPer capita income $36,608 in 2006Developing countriesMiddle income nations Low income nationsWide variation in income per capita39-32006 ComparisonsU.S. GDP $13.2 trillionCombined GDP of developing countries $11.7 trillionU.S. has 5% of population but produces 27% of world’s outputU.S. per capita GDP 186 times that of Sierra LeoneWal-Mart’s annual revenue greater than all but 19 nation’s GDP39-4The Rich and the PoorSome developing countries have grown considerablyChina, Malaysia, Chile, ThailandSome developing countries have become high-incomeSingapore, Greece, Hong KongIncome gap has widenedDeveloping countries must grow faster to narrow the gap39-5Obstacles to DevelopmentThe path to economic developmentUse existing resources more efficientlyExpand available supplies of resourcesSimple generalizations are not possible39-6Obstacles to DevelopmentLack of natural resourcesOverpopulation9 out of 10 people born in a DVCReduced standard of livingLess saving and investmentLower productivityResource overuseUrban problemsQualifications 39-7Obstacles to DevelopmentUnemploymentUnderemploymentLow labor productivityBrain drainCapital accumulation is keyDomestic capital formationSavings potentialCapital flight39-8Obstacles to DevelopmentInvestment obstaclesLack of infrastructureTechnological advanceBorrowed technologySociocultural obstaclesInstitutional obstaclesLand reform39-9The Vicious Circle of PovertyRAPIDPOPULATIONGROWTHLOW LEVELOF DEMANDLOW LEVELOF SAVINGLOWPRODUCTIVITYLOW LEVELS OFINVESTMENT INPHYSICAL ANDHUMAN CAPITALLOWPER CAPITAINCOME39-10Role of GovernmentA positive roleLaw and orderLack of entrepreneurshipInfrastructureForced saving and investmentSocial-institutional problemsPublic sector problemsCorruption39-11CorruptionThe Corruption Perception Index, 2007Source: Transparency InternationalFinlandNew ZealandCanadaUnited KingdomGermanyUnited StatesUruguayTaiwanItalyGreeceChinaIndiaMexicoRussiaMyanmarSomalia0 1 2 3 4 5 6 7 8 9 1039-12Role of Advanced NationsExpanding tradeForeign aidDirect aidThe World Bank groupForeign harmDependency and incentivesBureaucracyCorruption and misuseFlows of private capital39-13Role of Advanced Nations Development Assistance as a Percentage of GDP, 2007Source: OECD0 .20 .40 .60 .80 1.00NorwayNetherlandsIrelandFranceGermanyCanadaJapanUnited States39-14Policies for Promoting GrowthEstablishing and implementing the rule of lawOpening economies to international tradeControlling population growthEncouraging foreign direct investmentBuilding human capital39-15Policies for Promoting GrowthMaking peace with neighborsEstablishing independent central banksEstablishing realistic exchange-rate policiesPrivatizing state industries39-16Policies for Industrial CountriesDirect foreign aid to the poorest countriesReduce tariffs, import quotas, and farm subsidiesProvide debt forgiveness to the poorest countriesAdmit temporary workers and discourage brain drainsDiscourage arms sales 39-17Famine in AfricaRoot causes – natural and human DroughtsLack of rainfallCivil strifeRebellions and civil warsPopulation growthEcological degradationPublic policiesExternal debt39-18Key Termsindustrially advanced countries (IACs)developing countries (DVCs)demographic transition viewunderemploymentbrain draincapital flightinfrastructurecapital-saving technologycapital-using technologythe will to developcapricious universe viewland reformvicious circle of povertycorruptionWorld Bankdirect foreign investment39-19