4. The Developing Countries PDF

THE DEVELOPING COUNTRIES THE CHARACTERISTICS OF THE DEVELOPING COUNTRIES JHANSSEN T. TAN, PH.D. 1 STANDARD OF LIVING STANDARD OF LIVING REFERS TO THE LEVEL OF WEALTH, COMFORT, MATERIAL GOODS, AND NECESSITIES AVAILABLE TO A CERTAIN SOCIOECONOMIC CLASS OR GEOGRAPHIC AREA...

THE DEVELOPING COUNTRIES THE CHARACTERISTICS OF THE DEVELOPING COUNTRIES JHANSSEN T. TAN, PH.D. 1 STANDARD OF LIVING STANDARD OF LIVING REFERS TO THE LEVEL OF WEALTH, COMFORT, MATERIAL GOODS, AND NECESSITIES AVAILABLE TO A CERTAIN SOCIOECONOMIC CLASS OR GEOGRAPHIC AREA. STANDARD OF LIVING IS A COMPARISON TOOL USED WHEN DESCRIBING TWO DIFFERENT GEOGRAPHIC AREAS. METRICS MAY INCLUDE THINGS LIKE WEALTH LEVELS, COMFORT, GOODS, AND NECESSITIES THAT ARE AVAILABLE TO PEOPLE OF DIFFERENT SOCIOECONOMIC CLASSES IN THOSE AREAS. THE STANDARD OF LIVING IS MEASURED BY THINGS THAT ARE EASILY QUANTIFIED, SUCH AS INCOME, EMPLOYMENT OPPORTUNITIES, COST OF GOODS AND SERVICES, AND POVERTY. STANDARD OF LIVING CLASS DISPARITY POVERTY RATE QUALITY AND AFFORDABILITY OF HOUSING HOURS OF WORK REQUIRED TO PURCHASE NECESSITIES GROSS DOMESTIC PRODUCT (GDP) AFFORDABLE ACCESS TO QUALITY HEALTHCARE QUALITY AND AVAILABILITY OF EDUCATION INCIDENCE OF DISEASE INFRASTRUCTURE NATIONAL ECONOMIC GROWTH ECONOMIC AND POLITICAL STABILITY POLITICAL AND RELIGIOUS FREEDOM ENVIRONMENTAL QUALITY CLIMATE SAFETY HUMAN DEVELOPMENT INDEX (HDI) THE HUMAN DEVELOPMENT INDEX (HDI) IS A STATISTIC DEVELOPED AND COMPILED BY THE UNITED NATIONS TO MEASURE VARIOUS COUNTRIES’ LEVELS OF SOCIAL AND ECONOMIC DEVELOPMENT. IT IS COMPOSED OF FOUR PRINCIPAL AREAS OF INTEREST: MEAN YEARS OF SCHOOLING, EXPECTED YEARS OF SCHOOLING, LIFE EXPECTANCY AT BIRTH, AND GROSS NATIONAL INCOME (GNI) PER CAPITA. THIS INDEX IS A TOOL USED TO FOLLOW CHANGES IN DEVELOPMENT LEVELS OVER TIME AND COMPARE THE DEVELOPMENT LEVELS OF DIFFERENT COUNTRIES. HUMAN DEVELOPMENT INDEX (HDI) THE HDI WAS ESTABLISHED TO PLACE EMPHASIS ON INDIVIDUALS' OPPORTUNITIES TO REALIZE SATISFYING WORK AND LIVES. EVALUATING A COUNTRY’S POTENTIAL FOR INDIVIDUAL HUMAN DEVELOPMENT PROVIDES A SUPPLEMENTARY METRIC FOR EVALUATING A COUNTRY’S LEVEL OF DEVELOPMENT BESIDES CONSIDERING STANDARD ECONOMIC GROWTH STATISTICS, SUCH AS GDP. THIS INDEX ALSO CAN BE USED TO EXAMINE THE VARIOUS POLICY CHOICES OF NATIONS; IF, FOR EXAMPLE, TWO COUNTRIES HAVE APPROXIMATELY THE SAME GNI PER CAPITA, THEN THE HDI CAN HELP TO EVALUATE WHY THEY PRODUCE WIDELY DISPARATE HUMAN DEVELOPMENT OUTCOMES. QUALITY OF LIFE QUALITY OF LIFE IS A MORE SUBJECTIVE AND INTANGIBLE TERM THAN STANDARD OF LIVING. AS SUCH, IT CAN OFTEN BE HARD TO QUANTIFY. THE FACTORS THAT AFFECT THE OVERALL QUALITY OF LIFE VARY BY PEOPLE'S LIFESTYLES AND THEIR PERSONAL PREFERENCES. REGARDLESS OF THESE FACTORS, THIS MEASURE PLAYS AN IMPORTANT PART IN THE FINANCIAL DECISIONS IN EVERYONE'S LIVES. SOME OF THE FACTORS THAT CAN AFFECT A PERSON'S QUALITY OF LIFE CAN INCLUDE CONDITIONS IN THE WORKPLACE, HEALTHCARE, EDUCATION, AND MATERIAL LIVING CONDITIONS. FACTORS CONTRIBUTING TO LOW STANDARD OF LIVING FACTORS THAT CAN CONTRIBUTE TO A LOW LIVING STANDARDS INCLUDE LACK OF ADEQUATE INDUSTRY IN A PARTICULAR AREA, LACK OF JOBS, INSUFFICIENT HEALTH CARE SERVICES, LACK OF PUBLIC TRANSPORTATION, LACK OF FOOD OR WATER, GOVERNMENT OPPRESSION, AND MANY MORE FACTORS. THE LIFE EXPECTANCY OF A PARTICULAR SEGMENT OF SOCIETY MAY ALSO CONTRIBUTE TO A LOW STANDARD OF LIVING. PEOPLE WHO HAVE LESS ACCESS TO QUALITY FOODS AND CLEAN HOMES, CITIES, AND COUNTRIES GENERALLY DIE EARLIER THAN PEOPLE IN MORE DEVELOPED AREAS THAT OFFER GOOD FOOD AND CLEANLINESS. FACTORS CONTRIBUTING TO LOW STANDARD OF LIVING PEOPLE IN THESE POORER AREAS ALSO TEND TO BE LESS SATISFIED WITH THEIR LIVES, WHICH CAN CONTRIBUTE TO INCREASED MORBIDITY. CRIME RATES CAN BEGIN TO RISE, FURTHER EXACERBATING THE LOW STANDARD OF LIVING IN AN AREA AND POTENTIALLY LEADING TO AN INCREASE IN MORTALITY RATES. LACK OF PUBLIC SERVICES SUCH AS POLICE AND FIRE CREWS CAN PERPETUATE THE HIGH CRIME RATES AS WELL. SUCH POVERTY AND HIGH CRIME RATES CAN BE CAUSED BY SEVERAL FACTORS, INCLUDING GOVERNMENT CORRUPTION, LACK OF FUNDING FOR BASIC PUBLIC SERVICES, OCCURRENCE OF NATURAL DISASTERS SUCH AS DROUGHTS, FLOODS, AND HURRICANES, OR ISOLATION FROM OTHER SOCIETIES. FACTORS CONTRIBUTING TO LOW STANDARD OF LIVING CORRUPT GOVERNMENTS EXIST THROUGHOUT THE WORLD, AND THE GENERAL POPULACE OF THAT COUNTRY CAN SUFFER IMMENSELY. THE DISTRIBUTION OF WEALTH IN A COUNTRY CAN BE SKEWED SO THAT VERY FEW PEOPLE HAVE THE MOST MONEY, WHILE THE MAJORITY OF PEOPLE MUST MAKE ENDS MEET WITH VERY LITTLE. THIS CAN LEAD TO UNREST IN SOCIETY, ANGER TOWARD THE GOVERNMENT, AND UPHEAVAL THAT LEADS TO EVEN MORE STRIFE IN AN AREA. FACTORS CONTRIBUTING TO LOW STANDARD OF LIVING WAR IS PERHAPS THE BIGGEST CONTRIBUTING FACTOR TO A LOW STANDARD OF LIVING. WAR-TORN AREAS TEND TO SUFFER IMMENSELY BOTH DURING AND AFTER THE WAR HAS TAKEN PLACE, AND IT CAN TAKE DECADES FOR A SOCIETY TO REBUILD AFTER BATTLES HAVE TAKEN PLACE. MORTALITY RATES ARE LIKELY TO RISE SIGNIFICANTLY DURING AND AFTER A WAR, AND ACCESS TO BASIC SERVICES SUCH AS HEALTH CARE IS LIKELY TO BE LIMITED FOR LONG PERIODS OF TIME. DESTRUCTION OF BUILDINGS, ROADS, AND OTHER PROPERTIES IS LIKELY, AND FAMILIES MAY BE DISPLACED FOR MONTHS OR YEARS ON END. LOW LEVELS OF PRODUCTIVITY POOR PRODUCTIVITY HAMPERS WAGE GROWTH, STOKING PUBLIC DISSATISFACTION. “PRODUCTIVITY ISN’T EVERYTHING, BUT IN THE LONG RUN IT IS ALMOST EVERYTHING. A COUNTRY’S ABILITY TO IMPROVE ITS STANDARD OF LIVING OVER TIME DEPENDS ALMOST ENTIRELY ON ITS ABILITY TO RAISE ITS OUTPUT PER WORKER.” - PAUL KRUGMAN FACTORS THAT COULD HOLD BACK PRODUCTIVITY INCLUDE AN AGING POPULATION, CORRUPTION, WEAK INFRASTRUCTURE, LACK OF TECHNOLOGICAL ADVANCEMENT. RAPID POPULATION GROWTH RAPID POPULATION GROWTH LEADS TO A COUNTRY WITH A YOUNG AVERAGE AGE. YOUNG POPULATIONS REQUIRE CREATION OF NEW INFRASTRUCTURE INCLUDING SHELTER, HEALTH CARE, AND SCHOOLS. IF THE COUNTRY HAS THE RESOURCES TO EMPLOY THEIR NEW LABOR, THE POPULATION INCREASE CAN LEAD TO RAPID ECONOMIC GROWTH. IF, ON THE OTHER HAND, THE COUNTRY CANNOT UTILIZE ITS WORKFORCE PRODUCTIVELY, THEN UNEMPLOYMENT RISES, OFTEN LEADING TO CIVIL STRIFE AND EMIGRATION. THE CAPACITY OF THE LEAST DEVELOPED COUNTRIES* TO EXPAND PUBLIC SECTOR SERVICES, SUCH AS EDUCATION AND HEALTH, IS CHALLENGED BY THE RAPIDLY INCREASING NUMBERS OF CHILDREN AND YOUTH, WHICH HAVE BEEN RISING FASTER THAN SERVICE SUPPLY. AUSTRIA AUSTRALIA POP. 9,006,400 POP. 25,499,881 DENMARK NORWAY POP. 5,792,203 POP. 5,421,241 SWITZERLAND UK POP. 8,654,618 POP. 67,886,004  INDIA INDONESIA POP. 1,428,627,663 POP. 277,534,122 ZIMBABWE KENYA POP. 14,862,927 POP. 53,771,300 BURUNDI NIGERIA POP. 11,890,781 POP. 223,804,632 PHILIPPINES POP. 117,337,367 THE MALTHUSIAN CATASTROPHE IN 1798, THOMAS MALTHUS WARNED IN HIS ESSAY ON THE PRINCIPLE OF POPULATION ABOUT THE PERILS OF OVERPOPULATION AND HOW POPULATION GROWTH WILL EXHAUST THE WORLD FOOD SUPPLY BY THE MIDDLE OF THE 19TH CENTURY. THE MALTHUSIAN CATASTROPHE IS BASICALLY IS A PREDICTION THAT GROWING POPULATION WILL SOON OUTPACE THE PLANET’S AGRICULTURAL PRODUCTION CAPACITY. IN OTHER WORDS, AT SOME POINT, THERE WILL BE FAR TOO MANY PEOPLE AND A VERY LIMITED FOOD SUPPLY, LEADING TO GREAT UNREST. ALTHOUGH SCIENTISTS ARGUE THAT MALTHUS OVERLOOKED TECHNOLOGICAL ADVANCEMENTS ESPECIALLY IN FOOD PRODUCTION; DEMOGRAPHIC TRANSITIONING DUE TO MIGRATION; ADVANCES IN PUBLIC HEALTH AND MODERN CONTRACEPTION. THE MALTHUSIAN CATASTROPHE DEPENDENCY BURDEN THE DEPENDENCY RATIO IS A MEASURE OF THE NUMBER OF DEPENDENTS AGED ZERO TO 14 AND OVER THE AGE OF 65, COMPARED WITH THE TOTAL POPULATION AGED 15 TO 64. THIS DEMOGRAPHIC INDICATOR GIVES INSIGHT INTO THE NUMBER OF PEOPLE OF NON-WORKING AGE, COMPARED WITH THE NUMBER OF THOSE OF WORKING AGE. IT IS ALSO USED TO UNDERSTAND THE RELATIVE ECONOMIC BURDEN OF THE WORKFORCE AND HAS RAMIFICATIONS FOR TAXATION. UNEMPLOYMENT AND UNDEREMPLOYMENT WHILE UNEMPLOYMENT AND UNDEREMPLOYMENT ARE STILL A MAJOR CONCERN AMONG MANY INDUSTRIALIZED COUNTRIES, THESE ISSUES HIT DEVELOPING COUNTRIES MUCH HARDER. IN SOUTH ASIA, LATIN AMERICA, AND AFRICA, A CONTEXT OF MASSIVE INFORMALITY AND POOR ACCESS TO SOCIAL PROTECTION MAKES WORKERS PARTICULARLY VULNERABLE TO SHOCKS, WHETHER THEY BE ECONOMIC (BANKRUPTCY, DISMISSAL, ETC.) OR PERSONAL (ILLNESS, OCCUPATIONAL ACCIDENT, ETC.). MASS UNEMPLOYMENT AND UNDEREMPLOYMENT EXACERBATE INEQUALITIES AND FUEL A SENSE OF RESENTMENT, OCCASIONALLY LEADING EVEN TO VIOLENCE. UNEMPLOYMENT AND UNDEREMPLOYMENT THE MAJORITY OF WORKERS IN DEVELOPING COUNTRIES "ARE ENGAGED IN LOW- PRODUCTIVITY WORK THAT IS OFTEN PHYSICALLY ONEROUS BUT YET YIELDS ONLY MEAGRE EARNINGS." IN DEVELOPING COUNTRIES, WHERE JOB MARKETS ARE PARTICULARLY TIGHT, SPECIAL ATTENTION MUST BE GIVEN TO ENSURING THAT THESE EMPLOYMENT SERVICES ALSO TARGET EMPLOYERS IN ORDER TO HELP THEM CREATE POSITIONS–INCLUDING IN INFORMAL BUSINESSES, WHICH MAKE UP THE MAJORITY OF THE ECONOMIC FABRIC. COMMODITY DEPENDENCE A COUNTRY IS CONSIDERED TO BE DEPENDENT ON COMMODITY EXPORTS WHEN COMMODITIES CONSTITUTE THE PREDOMINANT SHARE OF ITS EXPORTS. A COMMODITY, ALSO CALLED PRIMARY PRODUCT OR PRIMARY GOOD, IS A GOOD SOLD FOR PRODUCTION OR CONSUMPTION JUST AS IT WAS FOUND IN NATURE. COMMODITIES INCLUDE CRUDE OIL, COAL, COPPER OR IRON ORE, ROUGH DIAMONDS, AND AGRICULTURAL PRODUCTS SUCH AS WHEAT, COFFEE BEANS OR COTTON. THESE ECONOMIES ARE SUSCEPTIBLE TO VOLATILE GLOBAL COMMODITY PRICES, ESPECIALLY WHEN THEY OVER-SPECIALIZE (DUTCH DISEASE). FOREIGN DEPENDENCY FOREIGN DEPENDENCY, IS A GLOBAL POWER STRUCTURE IN WHICH WEAKER COUNTRIES ARE ECONOMICALLY RELIANT ON STRONGER COUNTRIES, ALLOWING THE STRONGER COUNTRIES TO EXERCISE SIGNIFICANT CONTROL OVER THE WEAKER COUNTRIES’ ECONOMIC AND POLITICAL BEHAVIOR. FOREIGN DEPENDENCY GENERALLY FOSTERS UNDERDEVELOPMENT IN THE DEPENDENT COUNTRY; A COUNTRY’S ADOPTION OF POLICIES TAILORED TO THE INTERESTS OF A STRONGER COUNTRY MAY INHIBIT THE WEAKER COUNTRY’S DOMESTIC GROWTH, SPEED ENVIRONMENTAL DESTRUCTION, OR CREATE TEMPORARY GROWTH THAT PRECLUDES SUSTAINABLE DEVELOPMENT AND ECONOMIC INDEPENDENCE. FOREIGN DEPENDENCY LESS-DEVELOPED COUNTRIES’ RELIANCE ON FOREIGN CAPITAL CAN ALSO PERPETUATE DEPENDENCY. MUCH OF THE FINANCIAL CAPITAL AVAILABLE IN A DEVELOPING COUNTRY ARRIVES FROM OUTSIDE ITS BORDERS. THAT CAPITAL MAY TAKE THE FORM OF FOREIGN AID OR FOREIGN DIRECT INVESTMENT (FDI), WHICH INCLUDES ACTIVITIES SUCH AS HOSTING FOREIGN FIRMS THAT PROVIDE JOBS, INCREASE DOMESTIC CAPITAL FLOWS, AND GENERATE TAX DOLLARS. HOWEVER, FDI ALSO MAY GENERATE PROBLEMS. FOREIGN FIRMS FROM DEVELOPED NATIONS TYPICALLY DOMINATE THE LOCAL MARKET, PREVENTING OR DISCOURAGING THE DEVELOPMENT OF LOCAL INDUSTRIES. MOREOVER, THE ADMINISTRATION OF THE HOST COUNTRY MAY BE ASKED TO PROVIDE TAX INCENTIVES TO KEEP THE FOREIGN COMPANY IN THE COUNTRY. THE HOST COUNTRY MAY ALSO RELAX WORKPLACE OR ENVIRONMENTAL REGULATIONS TO INDUCE FOREIGN COMPANIES TO ESTABLISH OR MAINTAIN BUSINESSES THERE.  Clydesdale, Greg. (2022). Industrial Development: How States Build Capabilities and Deliver Economic Prosperity Mankiw, Greogory. (2019). Macroeconomics: 10th Edition. Krugman, Paul & Wells, Robin. (2018). Macroeconomics: 5th Edition. Tribe, Michael, Nixson, Frederick, & Sumner, Andy. (2010). Economics and Development Studies. Rosefielde, Steven. (2002). Comparative Economic Systems: Culture, Wealth, and Power in the 21st Century Mankiw, Gregory. (2001). Brief Principles of Macroeconomics. https://www.investopedia.com/articles/financial-theory/08/standard-of- living-quality-of-life.asp https://www.investopedia.com/terms/h/human-development-index- hdi.asp https://www.smartcapitalmind.com/what-factors-contribute-to-a-low- standard-of-living.htm https://www.sciencedirect.com/topics/social-sciences/rapid-population- growth https://www.un.org/en/development/desa/population/publications/pdf/po pfacts/popfacts_2010-5.pdf SOURCES