Diverse Structures and
Common Characteristics
Study of Developing Nations
1
Classification of Economies
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World Bank classifies 208 economies
(population=/> 30,000) based on gross
national income per capita, 2000
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LIC
=/< $755
LMC
=$756-$2995
UMC
=$2996-$9265
High- income OECD
=/>$9226
Other high-income countries
Different classification of other-high income
countries
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Classification of Economies
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Gross National Income is the total final
output of goods and services produced by the
economy, plus net factor income from the rest
of the world, minus sales taxes
Gross domestic product (GDP) + net factor
payments = Gross national product (GNP)
GNP- sales taxes = Gross national income
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4
Classification of Economies
East Asia and the Pacific:
Korea, Rep
China
Indonesia
UMC
LMC
LIC
Europe and Central Asia:
Czech Republic
Lithuania
Armenia
UMC
LMC
LIC
Latin America and the
Caribbean:
Brazil
Cuba
Nicaragua
UMC
LMC
LIC
5
Classification of Economies
Middle East and North
Africa:
Bahrain
Iraq
Yemen, Rep
UMC
LMC
LIC
South Asia:
Sri Lanka
India
LMC
LIC
Sub-Saharan Africa:
South Africa
Namibia
Ethiopia
UMC
LMC
LIC
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Classification of Economies
High Income OECD:
Australia
Canada
USA
Japan
Denmark
France
Switzerland
UK
Other high income countries:
The Bahamas
Kuwait
Hong Kong, China
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Structural Diversity of Developing
Economies
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Size (geographical, population) and income of the
country
Historical and colonial background
Physical and HR endowments
Ethnic and religious composition
Relative importance of public and private sectors
Nature of its industrial structure
Degree of dependence on external economic and
political forces
Distribution of power, institutional and political
structures
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9
Structural Diversity of Developing
Economies: Population and Income
Most Populous
1. China
2. India
3. USA
10. Japan
Least Populous
1. St Kitts-Nevis
2. Antigua and Barbuda
3. Dominica
Population
(mill)
GNP per
capita (USD)
1,261
1,016
282
127
840
460
34,260
34,210
41
68
73
6,660
9,190
3,260
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Structural Diversity of Developing
Economies: Industrial structure
Country
Nigeria
% of L Force
% of GDP
Agriculture Industry Agriculture
Industry
54
5
43
25
Bangladesh 64
14
30
18
Brazil
31
All
60
Developing
27
17
14
20
36
38
USA
25
2
29
2
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Structural Diversity of Developing
Economies: Important observations
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There is no necessary relation among a
country’s size, per capita income, and degree
of equality/ inequality
Colonialism exposed African and Asian
countries to new forms of potential
exploitation and have resulted in different
institutional and social patterns
Except for the Persian Gulf oil states, most
developing countries have minimal
endowments of raw materials and minerals
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Structural Diversity of Developing
Economies: Important observations
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Ethnic and religious conflicts have become
frequent post cold war. Indigenous
populations continue to be discriminated
against in Latin American countries. Malaysia
and Mauritius are exceptions
Most developing economies have mixed
economic systems and the degree of
corruption differs widely across countries
Majority of developing countries are agrarian
and agriculture is a way of life for the people.
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Structural Diversity of Developing
Economies: Important observations
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The various interest and power groups among
different segments of the populations in a
developing country is a result of their
economic, social, and political history
Case Study of Brazil and Costa Rica
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Common Characteristics of Developing
Nations:
Low levels of living and income inequality
 Extent of Poverty
 Health characterized by high IMRs and malnutrition
 Low levels of education and literacy
 Low levels of labor productivity
 High rates of population growth and dependency burdens
 Substantial dependence on agricultural production and
primary product exports
 Prevalence of Imperfect markets and incomplete
information
 Dominance, dependence, and vulnerability in
international relations
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Income inequality: Per Capita Gross National
Product in Selected Countries, 1997 (in U.S. dollars
at official exchange rates)
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Income: Comparison of GNP Per Capita
GNP Per Capita (US $)
Country
Exchange rate
PPP
UK
24,500
23,550
USA
34,260
34,260
Zimbabwe
480
2,590
Bangladesh
380
1,650
China
840
3,940
India
460
2,390
Sri Lanka
870
3,470
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Income gaps: growth rates of real
GNP per capita (avg annual growth)
Country
Africa:
Kenya
Nigeria
Asia:
India
South Korea
Latin America:
Brazil
Mexico
1980-90
1990-2000
0.3
-3.0
-0.3
-0.4
3.2
8.9
4.2
4.7
0.6
-0.9
1.5
1.5
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Distribution of Income
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Poverty: Share of population living on < $1/ day
Region
1990
1998
East Asia and Pacific
27.6
15.3
Europe and Central Asia
1.6
5.1
Latin America and the
16.8
Caribbean*
Middle East and N. Africa 2.4
15.6
South Asia*
44
40
Sub-Saharan Africa*
47.7
46.3
Total
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* Increase in absolute number of people
1.9
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Health: Infant Mortality Rates in Selected
Countries, 1998 (per 1,00 live births)
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Health and Education: Indicators
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HDI and GDP Ranks
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HDI variations for similar incomes,
1999
Country
HDI
GNP per cap~ PPP $1000
Kenya
0.514
Uganda
0.435
GNP per cap~ PPP $2000
Vietnam
0.682
Pakistan
0.498
GNP per cap~ PPP $3000
Sri Lanka
0.735
Indonesia
0.677
HDI rank
123
141
101
127
81
102
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Population and Labor Force
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Composition of World Exports (percentages
of primary and manufactured products)
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Composition of World Exports (percentages
of primary and manufactured products)
Markets are imperfect in developing countries
due to:
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Economies of scale
Thin markets for many products due to limited
demand
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Widespread externalities (good and bad)
Prevalence of common property resources
Incomplete information
Information is costly to obtain
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