Differences between Developing and Developed Countries

Developed Countries Developing countries

GDP Per Capita • Income from production of high value goods + • Income predominantly from agricultural goods
services
• Prices of agricultural goods tend to be low so generates
• Highly skilled labour force low income Oil v Wheat?

• Capital intensive production methods • Protection policies such as tariffs imposed on agricultural
goods by some countries

• This reduces export revenue for developing countries

GDP Per Capita Impact • Good level of income allows for development • Poorer countries struggle to earn income they need to
on Economic in services and infrastructure and in improving improve economic development
Performance education and productivity
• They may be forced to borrow money from abroad to
invest in their economies resulting in increased foreign
debt (interest payments)

Distribution of Income • Efficient progressive tax systems in place • Have larger informal (Black Market) economies, making
and Wealth tax collection difficult
• Provide welfare benefits to the poor
• Therefore have less revenue to spend on welfare and
public services like education, healthcare so the cycle
continues

• More likely to suffer from corruption

Distribution of Income • Absolute poverty largely eradicated from • More people living in absolute poverty
and Wealth Impact on developed countries (but relative poverty still
economic Performance a concern)
 Differences between Developing and Developed Countries

Productivity • Higher productivity level due to a skilled • More unskilled labour due to poor education system and
labour force and investment in modern limited training opportunities
technology
• Do not have the money to invest in capital equipment and
machinery will lead to lower productivity

Productivity Impact on • Economic growth more likely as productivity • Relatively unskilled leads to fewer products and services
economic Performance and output should improve year on year so produced and lower income as a result
revenue should improve too
• Less revenue available to invest in improving their
economies

Population growth • Slow population growth rates due to women
choosing careers, marrying later, having fewer
children
• High cost of raising children another factor for
lower birth rates
• Rapidly growing population due to high birth rates
(poorest regions in Africa have 2.7% rith rate compared to
0.4% in EU

Population growth • May need to plan for a ageing population e.g. • Rapid birth rates put strain on resources
Japan, china
Impact on Economic • Absolute poverty may rise as population grows
Performance
• Tend to have larger dependent populations putting on
pressure on the working population e.g. 51% of Niger’s
population aged under 14

Size of Primary, • Mainly have jobs in the tertiary sector which • High proportion of workers in primary sector
secondary, tertiary requires a higher level of education and skill
Sector
 Differences between Developing and Developed Countries

Size of Primary, • Farming tends to be capital intensive cheaper • Farming tends to be labour intensive so workers more
secondary, tertiary to produce and output more productive unskilled so receive low wages and risk of drought and
Sector – Impact on crop failure
Economic development

Saving and Investment • Higher income enable them to save and invest • Lower revenues results in less opportunity to save and
more in capital equipment and development invest so productivity unlikely to improve
of new technology to increase productivity and
expand output

Saving and Investment • Money makes money • Trapped in poverty cycle

Impact on economic • Have to borrow to invest leads to high levels of debt

Development
• Interest rates tend to be high

Education • High quality school education accessible for all,
many go on to university results in ever
improving skilled workforce
• Lack income to invest in education as a result skills level
and productivity of the labour force likely to be low
• Poor education makes it difficult to raise themselves out
of poverty

Education • Higher economic growth and improving • Without education many trapped in intergenerational
productivity poverty (People born into poverty likely to be trapped in
Impact on economic poverty due to low education)
Development
• Results in low economic growth and productivity

Healthcare • Higher standard of medical care accessible to • May lack access to basic medical care such as vaccinations
all to prevent disease
• Better access to healthier foods, clean water
 Differences between Developing and Developed Countries

• Safe water and sanitation may not be accessible increase

spread of life threatening disease

Healthcare Impact on • Life expectancy higher many of which have an • Life expectancy lower and poor health will reduce
Economic development ageing population, as a result higher taxes may productive capacity. Swaziland 49 Japan 84
be in place to fund pensions and health
services
• Number of elderly people living in relative
poverty may rise

Infrastructure • More money to invest in roads, • Lack funds to invest in infrastructure which results in poor
communications, housing, transport links roads and unreliable power supply

Infrastructure • Attracts investment from Private business and • Poor infrastructure reduces productive capacity and
FDI (Foreign Direct Investment) discourages investment
Impact on economic
development