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    Differences in Economic Development Between Countries

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    andrew.collanan
    The document discusses differences in economic development between countries. It identifies several factors that contribute to these differences, including differences in income, savings, investment, population growth, education, industry composition, and export concentration. Countries can get trapped in a cycle of poverty where low incomes lead to low savings, investment, and productivity, perpetuating poverty. However, higher productivity could also lead to increasing incomes, savings, investment, and further productivity gains, creating a cycle of economic growth. Developing countries face challenges such as high population growth, debt, reliance on primary exports, underinvestment in human capital and infrastructure, and restrictions on their trade.

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    Differences in Economic Development Between Countries

    Uploaded by

    andrew.collanan
    25 views22 pages
    The document discusses differences in economic development between countries. It identifies several factors that contribute to these differences, including differences in income, savings, investment, population growth, education, industry composition, and export concentration. Countries can get trapped in a cycle of poverty where low incomes lead to low savings, investment, and productivity, perpetuating poverty. However, higher productivity could also lead to increasing incomes, savings, investment, and further productivity gains, creating a cycle of economic growth. Developing countries face challenges such as high population growth, debt, reliance on primary exports, underinvestment in human capital and infrastructure, and restrictions on their trade.

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    Differences in Economic Development between Countries

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    The document discusses differences in economic development between countries. It identifies several factors that contribute to these differences, including differences in income, savings, investment, population growth, education, industry composition, and export concentration. Countries can get trapped in a cycle of poverty where low incomes lead to low savings, investment, and productivity, perpetuating poverty. However, higher productivity could also lead to increasing incomes, savings, investment, and further productivity gains, creating a cycle of economic growth. Developing countries face challenges such as high population growth, debt, reliance on primary exports, underinvestment in human capital and infrastructure, and restrictions on their trade.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    25 views22 pages

    Differences in Economic Development Between Countries

    Uploaded by

    andrew.collanan
    The document discusses differences in economic development between countries. It identifies several factors that contribute to these differences, including differences in income, savings, investment, population growth, education, industry composition, and export concentration. Countries can get trapped in a cycle of poverty where low incomes lead to low savings, investment, and productivity, perpetuating poverty. However, higher productivity could also lead to increasing incomes, savings, investment, and further productivity gains, creating a cycle of economic growth. Developing countries face challenges such as high population growth, debt, reliance on primary exports, underinvestment in human capital and infrastructure, and restrictions on their trade.

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    Economic Development

    Differences in Economic Development


    between Countries
    Categorising Economic Development
    Countries with high GDP/head usually have high living standards and rank
    well in other metrics for economic development, however this is not always
    the case.

    Using a measure like the Human Development Index (HDI) is a good way to
    compare economic development as it takes into account multiple factors.

    The United Nations measures economic development using the HDI.


    Causes of Differences in Economic Development
    between Countries
    There are lots of factors that determine the differences in economic development
    between countries.

    ● Differences in incomes per head


    ● Differences in saving due to differences in income per head
    ● Differences in investment
    ● Differences in population growth
    ● Differences in education and healthcare
    ● Differences in the size of the primary, secondary and tertiary sectors
    ● Differences in the concentration on a narrow range of exports (most of which
    are primary products).
    ● Differences in productivity
    The Cycle of Poverty
    The causes of differences in economic
    development are interrelated. Countries
    can be subject to what is known as the
    under-development trap or the vicious
    circle of poverty. One problem is that a
    country with low incomes has a low saving
    rate. This means that most of their
    resources are used to produce consumer
    goods. The lack of capital goods keeps
    productivity and income low.
    Cycle of Economic Development
    One thing to bear in mind is that this
    poverty cycle could operate in a
    positive manner.

    Higher productivity could lead to


    higher incomes which could lead to
    higher savings which could lead to
    higher investment which could lead to
    higher productivity…
    Hard choices for developing countries
    Do developing countries want goods
    today or more goods in the future?

    We sometimes call the basic amount


    of goods requires to survive the
    sustenance level.

    The issue for developing countries is


    that almost all production needs to go
    into consumer goods to maintain this
    sustenance level.
    Hard choices for developing countries

    Developing countries still need to


    maintain some capital production to
    account for capital consumption
    (depreciation).
    What are some issues that developing countries face?

    ● High growth of population


    ● High levels of international debt
    ● Reliance on the export of primary products
    ● Lack of investment in human capital and capital goods
    ● Emigration of key workers
    ● Trade restrictions on their products
    ● Unbalanced economies
    Task
    In groups, come up with some ideas about how
    developing countries can overcome the issues that they
    face.
    Extension - why might some economists disagree on the
    best ways to overcome these issues?
    How can developing countries solve their issues
    One way is to invite Multinational Corporations (MNCs) into the
    country. This will bring lots of employment opportunities and
    investment.

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