Supplement: Comparative Economic Development

Chapter 2
Supplement
Comparative
Economic
Development
Copyright 2009 Pearson Addison-Wesley. All rights reserved.
Suppmentary Lecture
Common Characteristics of developing
countries (based on Todaro text 10th edition)
Lower levels of living and productivity

Lower levels of human capital
Higher levels of inequality and absolute poverty
Higher population growth rates
Greater social fractionalization
Larger rural population- rapid migration to cities
Lower levels of industrialization and manufactured exports
Adverse geography
Underdeveloped financial and other markets
Colonial legacies- poor institutions etc.
2-2
Defining the Developing World

World Bank Scheme- ranks countries on
GNP/capita
LIC, LMC, UMC, OECD (see Table 2.1 and
figure 2.1)
2-3
Table 2.1 Classification of Economies

by Region and Income, 2007
2-4
Table 2.1 Classification of Economies by

Region and Income, 2007 (continued)
(LatinAmericaandtheCaribbean)
(SubSaharanAfrica)
2-5
Table 2.1 Classification of Economies by

Region and Income, 2007 (continued)
2-6
Figure 2.1 Nations of the World,

Classified by GNI Per Capita
2-7
Measuring Development for Quantitative

Comparison across Countries
Gross National Income (GNI)
Gross Domestic Product (GDP)
PPP method instead of exchange rates as
conversion factors (see figure 2.2)
2-8
Figure 2.2 Income Per Capita in

Selected Countries
2-9
Table 2.2 A Comparison of Per Capita

GNI, 2005
2-10
Some Basic Indicators of

Development
Health
Life Expectancy
Education
HDI as a holistic measure of living levels
HDI also varies for groups within countries
HDI also varies by region in a country
HDI also reflects rural-urban differences
2-11
Table 2.3 Commonality and

Diversity: Some Basic Indicators
2-12
Figure 2.3 Human Development

Disparities within Selected Countries
2-13
Figure 2.3 Human Development Disparities

within Selected Countries (continued)
2-14
Table 2.4 Human Development for

23 Selected Countries (2004 Data)
2-15
Table 2.4 Human Development for 23

Selected Countries (2004 Data)
(continued)
2-16
Table 2.5 Human Development Index

Variations for Similar Incomes (2004 Data)
2-17
10 Characteristics of the Developing

World: Diversity within Commonality
1. Lower levels of living and productivity
2. Lower levels of human capital (health,
education, skills)
3. Higher Levels of Inequality and Absolute
Poverty
Absolute Poverty
World Poverty
4. Higher Population Growth Rates

Crude Birth rates
2-18
Figure 2.4 Shares of Global Income,

2005
2-19
Table 2.6 The 12 Most and Least

Populated Countries and Their Per
Capita Income, 2005
2-20
Figure 2.5 Under-5 Mortality Rates,

1990 and 2005
2-21
Table 2.7 Primary School Enrollment

and Pupil-Teacher Ratios
2-22
Figure 2.6 Correlation between Under5 Mortality and Mothers Education
2-23
Figure 2.7 People Living in Poverty,

1981-2002
2-24
Table 2.8 Crude Birth Rates Around the

World, 2005
2-25

5. Greater Social Fractionalization
6. larger Rural Populations but Rapid Ruralto-Urban Migration
7. Lower levels of Industrialization and
Manufactured Exports
8. Adverse Geography
Resource endowments
2-26
Table 2.9 The Urban Population in

Developed Countries and Developing
Regions
2-27
Table 2.10 Share of the Population

Employed in the Industrial Sector in Selected
Countries, 2000-2005 (%)
2-28

9. Underdeveloped Financial and Other markets
Imperfect markets
Incomplete information
10. Colonial Legacy and external dependence

Institutions
Private property
Personal taxation
Taxes in cash rather than in kind
2-29
Low Income Countries Today And

Developed Countries Then
Eight differences
Physical and human resource endowments

Per capita incomes and levels of GDP
Climate
Population size, distribution, and growth
Historic role of international migration
International trade benefits
Scientific/technological research
Efficacy of domestic institutions
2-30
Convergence?
Evidence of unconditional convergence is
hard to find
Per capita income convergence?
2-31
Figure 2.8 Convergence among OECD

Countries but Divergence in the World
as a Whole
2-32
Figure 2.9 Per Capita GDP Growth in

125 Developing Countries, 1995-2005
2-33
Figure 2.10 Growth Convergence and

Absolute Income Convergence
2-34
Long-Run causes of Comparative

Development
Schematic Representation
Geography
Institutional quality- colonial and post-colonial
Colonial legacy- pre colonial comparative
advantage
Evolution and timing of European development
Inequality- human capital
Type of colonial regime
2-35
Figure 2.11 Schematic Representation

of Leading Theories of Comparative
Development
2-36
Role of Institutions
Acemoglu, Johnson, and Robinsons
reversal of fortune and extractive
institutions
Bannerjee and Iyers , property rights
institutions. Landlords versus cultivators
2-37
Case Study: Pakistan
2-38
Case Study: Bangladesh
2-39
Concepts for Review
Absolute poverty
Brain drain
Crude birthrate
Convergence
Death rate
Dependency burden
Developed world
Economic Institutions
Foreign exchange
Gross domestic product
(GDP)
Gross national product

(GNP)
Human Development
Index (HDI)
Imperfect markets
Income gap
Income inequality
Incomplete information
2-40
Concepts for Review (contd)

Malnutrition
International poverty line Middle-income
countries (MICs)
Labor productivity
Mixed economic
Least developed
systems
countries (LLDCs)
Newly industrialized
Levels of living
countries (NICs)
Low income countries
(LICs)
Physical resources
Infant mortality rate
2-41
Concepts for Review (contd)

Primary industrial
sector
Production function
Purchasing power
equivalent
Purchasing power
parity (PPP)
Resource endowment
Secondary industrial
sector
Tertiary industrial
sector
World Bank
2-42

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Chapter 2

Copyright 2009 Pearson Addison-Wesley. All rights reserved.

Lower levels of living and productivity

Copyright 2009 Pearson Addison-Wesley. All rights reserved.

Defining the Developing World

Copyright 2009 Pearson Addison-Wesley. All rights reserved.

Table 2.1 Classification of Economies

Copyright 2009 Pearson Addison-Wesley. All rights reserved.

Table 2.1 Classification of Economies by

Copyright 2009 Pearson Addison-Wesley. All rights reserved.

Table 2.1 Classification of Economies by

Copyright 2009 Pearson Addison-Wesley. All rights reserved.

Figure 2.1 Nations of the World,

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Measuring Development for Quantitative

Copyright 2009 Pearson Addison-Wesley. All rights reserved.

Figure 2.2 Income Per Capita in

Copyright 2009 Pearson Addison-Wesley. All rights reserved.

Table 2.2 A Comparison of Per Capita

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Some Basic Indicators of

Table 2.3 Commonality and

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Figure 2.3 Human Development

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Figure 2.3 Human Development Disparities

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Table 2.4 Human Development for

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Table 2.4 Human Development for 23

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Table 2.5 Human Development Index

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10 Characteristics of the Developing

4. Higher Population Growth Rates

Figure 2.4 Shares of Global Income,

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Table 2.6 The 12 Most and Least

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Figure 2.5 Under-5 Mortality Rates,

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Table 2.7 Primary School Enrollment

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Figure 2.6 Correlation between Under5 Mortality and Mothers Education

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Figure 2.7 People Living in Poverty,

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Table 2.8 Crude Birth Rates Around the

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10 Characteristics of the Developing

Table 2.9 The Urban Population in

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Table 2.10 Share of the Population

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10 Characteristics of the Developing

10. Colonial Legacy and external dependence

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Low Income Countries Today And

Physical and human resource endowments

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Copyright 2009 Pearson Addison-Wesley. All rights reserved.

Figure 2.8 Convergence among OECD

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