Download Issues in Developing Countries

Issues
in Developing Countries
Bambang Wahyu Nugroho
Lecture 1
World Bank income groups
HIGH INCOME
UPPER MIDDLE INCOME
LOWER MIDDLE INCOME
LOW INCOME
Definition
• Developing country is a term generally used to describe a
nation with a low level of material well being.
• There is no single internationally-recognized definition of
developed country, and the levels of development may vary
widely within so-called developing countries, with some
developing countries having high average standards of living.
• Some international organizations like the World Bank uses
strictly numerical classifications. The World Bank considers all
low- and middle- income countries as "developing".
• In its most recent classification, economies are divided using
2008 Gross National Income per capita. In 2008, countries with
GNI per capita below US$11,905 were considered developing.
Other institutions use less specific definitions.
• Countries with more advanced economies than other
developing nations, but which have not yet fully demonstrated
the signs of a developed country, are grouped under the term
newly industrialized countries.
Classification
•
The IMF uses a flexible classification system that
considers:
1. per capita income level,
2. export diversification—so oil exporters that have high per capita
GDP would not make the advanced classification because
around 70% of its exports are oil, and
3. degree of integration into the global financial system.
•
The World Bank classifies countries into four income
groups.
– Low income countries have GNI per capita of US$975 or less.
– Lower middle income countries have GNI per capita of
US$976–$3,855.
– Upper middle income countries have GNI per capita between
US$3,856–$11,905.
– High income countries have GNI above $11,906.
Measure & concept of development
• The development of a country is measured with
statistical indexes such as income per capita (per
person) (GDP), life expectancy, the rate of literacy, etc.
• The UN has developed the HDI, a compound indicator of
the above statistics, to gauge the level of human
development for countries where data is available.
• Developing countries are in general countries which
have not achieved a significant degree of
industrialization relative to their populations, and which
have, in most cases a medium to low standard of living.
• There is a strong correlation between low income and
high population growth.
contd…
• The terms utilized when discussing developing
countries refer to the intent and to the constructs
of those who utilize these terms.
• Other terms sometimes used are less developed
countries (LDCs), least economically developed
countries (LEDCs), "underdeveloped nations" or
Third World nations, and "non-industrialized
nations".
• Conversely, the opposite end of the spectrum is
termed developed countries, most economically
developed countries (MEDCs), First World
nations and "industrialized nations".
contd…
• To moderate the euphemistic aspect of the word
developing, international organizations have started to
use the term Less economically developed country
(LEDCs) for the poorest nations which can in no sense
be regarded as developing. That is, LEDCs are the
poorest subset of LDCs. This may moderate against a
belief that the standard of living across the entire
developing world is the same.
• The concept of the developing nation is found, under one
term or another, in numerous theoretical systems having
diverse orientations — for example, theories of
decolonization, liberation theology, Marxism, antiimperialism, and political economy.
Typology of countries
Countries are often loosely placed into four categories of
development. Each category includes the countries listed in
their respective article. The term "developing nation" is not a
label to assign a specific, similar type of problem.
1. Newly industrialized countries (NICs) are nations with
economies more advanced and developed than those in the
developing world, but not yet with the full signs of a developed
country.[4]NIC is a category between developed and
developing countries. It includes Brazil, the People's Republic
of China, India, Malaysia, Mexico, Philippines, South Africa,
Thailand and Turkey.
2. Big Emerging Market (BEM) economies, a label with various
meanings. Jeffrey Garten identified, Brazil, Argentina, Mexico,
South Africa, Poland, Turkey, India, Indonesia, the People's
Republic of China, and South Korea as the Big 10 BEMs.
Contd…
3.
4.
Countries with long-term civil war or large-scale
breakdown of rule of law ("failed states") (e.g.
Afghanistan, Haiti,Pakistan, Somalia, Myanmar, Iraq,
Zimbabwe) or non-development-oriented dictatorship
(North Korea).
Some developing countries have been classified as
"Developed countries" such as South Africa, and
Turkey by the CIA, and Antigua and Barbuda, The
Bahamas, Bahrain, Barbados, Brunei, Estonia,
Equatorial Guinea, Kuwait, Oman, Qatar, Saudi Arabia,
and Trinidad and Tobago by the World Bank.
Limitation of the concept
• There is criticism of the use of the term ‘developing country’.
The term implies inferiority of a 'developing country'
compared to a 'developed country', which many such
countries dislike. It assumes a desire to ‘develop’ along the
traditional 'Western' model of economic development which
many countries, such as Cuba, have chosen not to follow.
Thus Cuba remains classed as 'developing' due to its low
gross national income but has a lower infant mortality rate
and higher literacy rate than the USA.
• The term 'developing' implies mobility and does not
acknowledge that development may be in decline or static in
some countries, particularly those southern African states
worst affected by HIV/AIDS. The term implies homogeneity
between such countries which vary wildly. The term also
implies homogeneity within such countries when wealth (and
health) of the most and least affluent groups varies wildly.