Matakuliah
Tahun
: J0114-Teori Ekonomi
: 2009
THE ECONOMICS OF DEVELOPING
COUNTRIES
Pertemuan 14
The Rich and the Poor
Classifications
– Industrially Advanced Countries (IACs)
High Income Nations
– Developing Countries (DVCs)
Low Income Nations
Middle Income Nations
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The Rich and the Poor
• 2004 Comparisons:
– U.S. GDP $12 Trillion
– All DVCs $5.5 Trillion
– U.S. has 5% of Population but Produces 31%
of World’s Output
– U.S. Per Capita GDP Many Times Greater
than DVCs
– Wal-Mart Sales Greater Than All But 19
Nations
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The Rich and the Poor
• Growth, Decline, and Income Gaps
– Differences in Ability to Improve
Positions Over Time
– Some Increase and Reach IAC Status
– Some Decline
– Income Gap is Widening Between Rich
and Poor
• Human Realities of Poverty
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Obstacles to Economic Development
• DVCs Must Use Existing Supplies of
Resources More Efficiently
• DVCs Must Expand Their Available
Supplies of Resources
– Natural Resources
– Human Resources
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Obstacles to Economic Development
• Overpopulation
• Standard of Living
– Saving and Investment
– Productivity
– Resource Overuse
– Urban Problems
Standard
Of Living
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Consumer Goods (Food) Production
Population
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Obstacles to Economic Development
• Qualifications
– Demographic Transition View
• Unemployment
• Underemployment
• Low Labor Productivity
• Brain Drain
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The Vicious Circle
The Vicious Circle of Poverty
LOW
PER CAPITA
INCOME
LOW
PRODUCTIVITY
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RAPID
POPULATION
GROWTH
LOW LEVELS OF
INVESTMENT IN
PHYSICAL AND
HUMAN CAPITAL
LOW LEVEL
OF SAVING
LOW LEVEL
OF DEMAND
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Role of Government
• A Positive Role
– Law and Order
– Lack of Entrepreneurship
– Infrastructure
– Forced Saving and Investment
– Social-Institutional Problems
• Public Sector Problems
– Corruption
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