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Economic Development and Transition

Economic Development and Transition. Chapter 18. Levels of Development. Chapter 18, Section 1. Levels of Development. ½ the world lives in poverty Economic well-being is measured in terms of development

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Economic Development and Transition

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  1. Economic Development and Transition Chapter 18

  2. Levels of Development Chapter 18, Section 1

  3. Levels of Development • ½ the world lives in poverty • Economic well-being is measured in terms of development • the process by which a nation improves economic, political and social well-being of its people

  4. Developed Nations and LDC’s • Developed nations are nations with a higher level of material well being • LDC’s (L4ss Developed Countries) or LDN’s (Less Developed Nations) are those with low economic well being • Mexico, Nepal, Central and Southern Africa, Republics of the former Soviet Union

  5. Measuring Development • Factors used in measuring development • Life expectancy • Infant mortality • Health care • Literacy • Labor force • Consumer goods • Infrastructure • Energy consumption • Per Capita GDP

  6. Issues of Development Chapter 18, Section 2

  7. Issues of Development • Population growth • Countries are increasing population without increasing their economy or development • Lack Factors of Production • Land, Physical Capital, Human Capital • Brain Drain…skilled people moved to more developed nations • Political Factors • Corrupt governments, instability, debt

  8. Financing Development Chapter 18, Section 3

  9. Developing Countries Need to Raise Financing • Internal financing…savings and investing from within… • LDC’s don’t have a lot of people who can do this. • Foreign investment • Foreign direct…building in the nation…done by MNC’s • Foreign portfolio…investing in stocks and bonds of foreign countries

  10. Foreign Aid • Some nations give aid (not loans) to LDC’s for varied reasons • Political • Economic • Human compassion • World Bank • Institution that raises money to distribute to nations of need • Coordinates economic development throughout the world

  11. International Monetary Fund (IMF) • Aids desperate countries through debt rescheduling and stabilization programs • Conditions are set by the IMF

  12. Transitions to Free Enterprise Chapter 18, Section 4

  13. Moving Towards a Market Economy • Privatization…sale and transfer of government owned businesses to individuals • Property rights need to be protected

  14. Transitions in Nations • Russia and Glasnost • Policy of political openness and reform that encouraged citizens to say what they wished without persecution • Perestroika…plan for transition from command to free economy • China and the Great Leap Forward • Plan for China to turn into an economic power • All land was taken over by the government • Huge disaster as there was no incentive • China now blends free markets and command ideals for their economic plan

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