- Economic
Development
- A
developed country (DC) is a country that has a relatively high GDP
or GDP per capita. A developing country, or less developed
country (LDC) is a country with relatively low GDP or GDP per
capita.
- There
is wide difference in GDP between the poorest of the poor countries
and the richest of the rich countries.
- The
infant mortality rate tends to be higher in LDC's than in DC's.
- In
the early 1990's, approximately 1.25 billion people were living
in poverty.
- Factors
that Affect Development
- Most
economists believe the following factors affect economic development:
natural resources, capital formation, labor productivity, technological
advances, the property rights structure, and the level of economic
freedom.
- A
country rich in natural resources does not necessarily experience
economic growth or development. And, a country poor in natural resources
is not necessarily doomed to experience low levels of economic growth
and development.
- There
are two types of capital: physical and human. An increase in capital
usually raises labor productivity.
- Labor
productivity refers to the amount of output a worker produces in
some time period. Labor productivity is relatively high in DC's
and relatively low in LDC's.
- Obstacles
to Economic Development
- Most
economists cite one or more of the following problems as the reason
(s) LDC's are poor: rapid population growth rate (high dependency
ratio), low savings rate, a culture that does not lend itself to
economic growth and development, political instability and government
expropriation of private property, and high tax rates.
For a more comprehensive discussion of economic development, please
visit my site A
Concise Guide to Economic Development.
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