2.16 - Economic Development

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Economic Development

Currently 70 % of humanity lives on less than $27 per day, or $10,000 a year, an income well below the US poverty line. Over 10% of the World lives in extreme poverty, living on less than $1.90 a day and over 22,000 children each day die from malnutrition.  The good news is that poverty is decreasing. In the past 30 years the number of people living in extreme poverty has been cut in half.  The number of children dying from poverty-related illness has also declined by 50%. These changes are attributed to Economic Development.

Geographers, economists, political scientists, all attempt to classify levels of economic development. Often we use the term less developed country (LDC) to refer to poorer countries where economies are often dependent on what they can mine or grow rather than based on human skill and technological information. Often agriculture is the dominant occupation. Most of Sub-Saharan Africa is made up of LDC's. Some LDC's have shifted to economies based on industry, which is higher wage but still labor- intensive, as well as a growing service sector. Brazil and Mexico are often included as countries who are transitioning and are called middle income countries.  Living standards are higher and social services are much improved.  The wealthiest countries are often referred to as more developed countries (MDC's). Dependence on labor intensive manufacturing is declining and shifting toward more skilled mechanized production or knowledge-based services and technology industries. MDC's provide adequate education, health and other social services.  Every label has problems. These labels obscure a great deal of complexity. They are also, offensive to some people around the World, implying one stage of economic development is superior to another and that perhaps the people in those countries are more or less superior as well. While we continue to search for more appropriate language, we'll stick with this terminology, keeping in mind its flaws.

Measures of Development

  • Gross domestic product (GDP): Total market value of all goods and services produced in a country in a given year
  • Gross national income (GNI):  GDP plus net income from abroad. GNI is corrected to account for purchasing power of currency around the globe.
  • Purchasing Power Parity (PPI): The amount that the local currency equivalent of US dollars purchases in a given country. 

The most long-standing measures of development are economic, but in recent decades more comprehensive measures of development have come into use.

  • Human Development Index (HDI): The HDI is an index that measures key dimensions of quality of life- a long and healthy life, access to education, and a decent standard of living. It relies on:
  1. Child Morality: reflects societal conditions; available food, health services, public sanitation.
  2. Literacy rates: critical to be able to read and write. Focus is on 15 to 24 year olds and equalizing male and female education rates.  Nigeria and Pakistan have the lowest youth literacy rates which China, Indonesia, and Brazil have almost universal literacy.
  3. Gender Inequality:  includes education, reproductive health, empowerment. Slovenia has the lowest score (the lower the score the more equal the society) and Yemen the highest.