Diverse structures

and
common characteristics
of developing countries
 The North and South classification

• The North consists of developed countries

situated in the Northern Hemisphere
• The South consists of the majority of
countries which are less developed
 Classification of developing countries

• Three worlds:
• First world is the highly industrialized, non-communist
Western European nations, plus the US, Australia, Canada,
New Zealand, and Japan.
• Second world includes the nations of Eastern Europe,
former Soviet Union and PRC
• Third world is the term given to identify remaining
countries ie. in Africa, Asia and Latin America
UN classification of the Third World
• least developed countries (about 44): poorest of
the poor (Fourth World) to emphasize their needs
for international assistance
• the non-oil exporting “developing nations” (about
88)
• the 13 petroleum-rich members of the OPEC
 Classification of OECD
• Divides the Third World into:
• low income countries (with a 1993 per capita
income less than US$650)eg. Bolivia, India, Kenya
• least developed countries (eg. Afghanistan,
Bangladesh, Lesotho, Nepal)
• middle income countries eg. Colombia, Costa Rica,
Malaysia, Thailand, Zimbabwe
• newly industrializing countries eg. Hong Kong,
Singapore, Spain, Argentina, Brazil, Taiwan
• OPEC countries eg. Algeria, Indonesia, Kuwait,
Nigeria, Saudi Arabia, Venezuela
Countries with different income levels
World bank classification of LDCs by income
 Classification by UNDP
• starting from 1990
• Human Development Index (HDI)
• countries are ranked ‘high’ (with HDI values of 0.8
above), ‘medium’ (with HDI values between 0.5-
0.799) and ‘low’ (with HDI values below 0.5)
• ranked more than 170 countries, however, not all
countries are ranked due to the lack of comparable
data.
Examples of rankings by HDI (1993)
HDI Rank Real Rank
GDP pc
US$
Canada 0.951 1 20950 7
Hong 0.909 22 21560 6
Kong
Malaysia 0.826 53 8360 42
Sri Lanka 0.698 89 3030 97
Ethiopia 0.237 168 20 173
 Structural diversity of LDCs
• Size of country (geographic area, population and income)
• Historical and colonial background
• Endowments of physical and human resources
• Ethnic and religious composition
• Relative importance of its public and private sectors
• Nature of its production structure
• Degree of dependence on external economic and political
forces (foreign trade, investment and aid)
• Distribution of power: institutional and political power within
the nation (eg. Interest groups)
Production structure of selected countries
(1993)

90
80
70
60
50 Tanzania
40 India
30 Brazil
20
10
0
Arg L % Ind L % Arg Y % Ind Y %
 Common Characteristics of LDCs
• Low levels of living, characterized by low incomes,
high inequality, poor health, and inadequate
education, slow growth rates of national income
• Indicators:
– real GDP or GNP per capita (using purchasing power
parity exchange rate)
– people living in absolute poverty
– infant mortality rates (# of children die before 1st
birthday out of 1000 live births)
– adult literacy rates
Correlation between GNP per capita and
indicators of living standards (1991)
Country GNP/ per Life Infant
capita expectancy mortality
$US
Uganda 170 46 118

Ghana 400 55 83

Argentina 2790 71 25

Denmark 23700 75 8
Correlation between GNP per capita and indicators of
living standards (1991)

Country GNP/ per capita Life expectancy

$US

China 370 69

Brazil 2940 66

Saudi Arabia 6200 64

 Per capita income and inequality

Lowest Top 20%

Country GNP/capita $US 40%
(percentage of national income)

Brazil 2940 7 67.5

1989
Tanzania 100 8 63
1991
US 1985 22240 16 42
 In fa n t m o r ta lity c h ild r e n u n d e r 5 T o ta l n u m b e r o f p e o p le in L D C s liv in g o n le s s
$ 1 a d a y in m illio n s (e x c lu d in g C h in a )
450

400
1000
350
980
300
deaths per 1000

1960 960
250

200 1994 940

150 920 T o ta l o f L D C s
100 900 (e x c lu d in g C h in
50
880
0
860
840

UK
li

zil
er

Ma

ia
n

ng

any
Nig

Bra
iop
ista

820
Ko

rm
Eth
han

ng

Ge
1987 1990 1993 1996 1998
Afg

Ho

T o ta l o f L D C s p o p u la tio n livin g o n le ss th a n $2 a d a y i
In fan t morta l ity fo r 19 97 , Un i ts m illio n s (e x c lu d in g C h in a ) - W o rld b a n k
N o . o f c o un t rie s in ra ng e

5 1 5 .0 - 4 6 .0
16 4 6 .0 - 7 7 .0
2 ,5 0 0 .0 0
18 7 7 .0 - 10 8 .0
12 10 8 .0 - 13 9 .0
2 ,0 0 0 .0 0
1 13 9 .0 - 17 0 .0
0 Da ta No t ava ilable T o t al o f L DC s p o p u lat
1 ,5 0 0 .0 0 livin g o n le s s th a n $2
d ay (e xc lu d in g C h in a)
1 ,0 0 0 .0 0

5 0 0 .0 0

0 .0 0
1987 1990 1993 1996 1998
Ex it
• Low levels of labour productivity (due to law of
diminishing marginal productivity or work attitudes or poor health & education)

• High Rates of population growth and

dependency burdens (eg. Crude birthrate:
– 10 - Hong Kong, Austria
– 30 - Philippines, Venezuela
– 50 - Uganda, Afghanistan

•High and rising levels of unemployment and

underemployment
•Substantial dependence on agricultural
production and primary-product exports
•Dominance, dependence and vulnerability in
international relations
Average Annual Population Growth Rates by Country
Income Group, 1980-2010
 Composition of Population in Low- and High-income Economies, 1995

In many low-income countries, the large difference between the percentage of

people of childbearing age causes population momentum which keeps population
growth rates high even when fertility rates drop. In many high-income countries,
where fertility rates are below replacement level and the largest segments of the
population are older, populations will increase much less.
Structure of production
Distribution of GDP %
Per capita Agricultu
Country GDP Industry Services
re

Tanzania 110 59 12 29

Somalia 120 65 9 26

Thailand 1420 12 39 48

Germany 22320 2 38 60