UNIT IV

Measures of Economic Development

I Measures

Introduction

The world is often divided into two broad categories of countries:

1. the More Developed Countries (MDCs), and

2. the Less Developed Countries (LDCs)

Such a broad regionalization scheme is likely to be overly simplistic, yet it commonly

used and it can be quite useful. Often different terms are used to describe each region.
Think of other terms that you have heard to describe the MDCs and the LDCs. Then
click here to see my list. One set of terms that is being used less and less is: First
World Countries and Third World Countries - Why? Well, what is the Second World?
How can you have a first and a third without a second? The Second World used to be
the command economy (communist) countries of the Soviet Union, Eastern Europe,
China, North Korea, Cuba, Vietnam, and a few other countries. With the collapse of
communism in most of these countries the "Second World" no longer exists.

We learned in our introductory lecture that when geographers divide the earth into
regions they do so based a a selected set of criteria. What criteria is commonly used to
divide the world into the MDCs and the LDCs?

I have selected some of the most commonly used Measures of Economic

Development. Carefully examine the maps of each measure below. Compare each map
with the map of the world's realms [Realms]. Try to get a general idea of how the
realms compare in terms of their level of economic development. First try to
categorize each realm as either a More Developed or a Less Developed realm. Then try
to rank them from the least developed realms to the most developed realms.

It should be noted that great disparities exist within realms and within individual
countries. The author of your textbook therefore discourages the use of the terms
MDCs and LDCs since there are highly developed areas and very poor areas within
most countries. Nevertheless, the terms are commonly used and we should be familiar
with their meanings AND THEIR GEOGRAPHY.

Measures of Economic Development

Here is my list of the most commonly used measures of economic development:

1. GNP per capita

2. Population Growth
3. Occupational Structure of the Labor Force

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 4. Urbanization
5. Consumption per capita
o ]
6. Infrastructure
7. Social Conditions
o literacy rate
o life expectancy
o health care
o caloric intake
o infant mortality
o other

Definitions of the Measures of Economic Development

1. GNP per capita

2. Population Growth
3. Occupational Structure of the Labor Force
4. Urbanization
5. Consumption per capita
6. Infrastructure
7. Social Conditions
o literacy rate
o life expectancy
o health care
o caloric intake
o infant mortality
o other

GNP per capita

GNP is the total market value of all final goods and services produced by a country in
one year. It is a measure of economic activity, or how much is produced in a country.
The more that a country produces per person , the more "developed" it is assumed to
be.

Which country produces more (has a higher GNP), India or Switzerland? Which is
more "developed"?

The GNP of India is $336 billion and the GNP of Switzerland is $288 billion. India
produces more than does Switzerland, but everybody would agree that Switzerland is
more economically advanced. Why?

The answer is population. the population of India is 988 million and the population of
Switzerland is 7 million. Therefore we must compare GNP PER CAPITA. To
calculate GNP per capita (or income per person) we divide the GNP by the population.
The GNP per capita of Switzerland is $40,630 and the GNP per capita of India is $
340.

Remember, always use GNP PER CAPITA when comparing the economic conditions
of different countries..

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Population Growth

In general, poorer countries have more rapid rates of population growth. Compare the
following maps to verify that this general trend is true. You may have to go back a
forth between them several times checking a different region of the world each time.

After comparing the maps look here for a graph showing population growth rates by
realm

Even though population growth rates seem small (1%, 2% 3%, or maybe 4%) they
have a big impact. a useful way to see this is by using the "Rule of 70". the rule of 70
is a way to ESTIMATE the number of years it takes for something to DOUBLE if you
know the annual percentage growth rate. Therefore, the population of the United States
with an annual population growth rate of 1% will double in about 70 years IF THE
POPULATION GROWTH RATE REMAINS AT 1%. The population of the country
of Mozambique, Southern Africa, with an annual population growth rate of 4% will
double in 17.5 years, quadruple in 35 years and increase by a factor of 8 in 70 years IF
THE POPULATION GROWTH RATE REMAINS AT 4%. So a small change in the
population growth rate results in significant increase in population. You shoud now
examine appendix A of your textbook and see how well the rule of 70 calculates the
population doubling time. (Note: the textbook uses the rate of "Natural Increase" to
measure the population growth rate.)

Occupational Structure of the Labor Force

Economic geographers divide economic activities into primary activities, secondary

activities, and tertiary activities. (Some add quaternary activities and quinary activities,
but we will not.)

PRIMARY ACTIVITIES are those that directly remove resources from the earth.
Generally they include AGRICULTURE, MINING, fishing, and lumbering.

SECONDARY ACTIVITIES involve converting resources into finished products.

These are the MANUFACTURING activities.

TERTIARY ACTIVITIES comprise the SERVICE sector of the economy. The tertiary
activities include retailing, transportation, education, banking, etc.

As countries develop the occupational structure of the labor force changes. In LDCs
most people are engaged in primary activities. In high income countries like the United
states most people are involved with the tertiary sector.

Urbanization

Urbanization is the percentage of a country's population who live in urban areas.

Urban areas generally means in towns and cities of 2,500 or more people. Currently

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just less than half of the worlds population live in urban areas. Generally as countries
develop urbanization increases.

Note the high urbanization found in the more leveloped countries and in South
America.

Consumption per capita

Consumption per person is a good indicator of development. The richer a country is,
the more its citizens consume. This map shows the energy consumption patterns for
the world. Similar maps could be made for "televisions per capita" or "cars per capita".

One consequence of consumption is pollution Carbon dioxide (CO2) is emitted when

fossil fuels are used. Scientists are studying the connection between CO2 build up in
the atmosphere ant global warming. this chart shows CO2 emissions for various
countries

Infrastructure

A country's infrastructure is defined by our author as "the foundations of a society:

urban centers, transport networks, communications, energy distribution systems,
farms, factories, mines, and such facilities as schools, hospitals, postal services, and
police and armed forces." (textbook page G-7).

This map shows the state of development of the transportation system as a measure of
its length per area of land. The darker the color the more developed is the
transportation system and hence, a greater the degree of economic development is
assumed.

Social Conditions

There are many other measures of economic development. Many refer to the social
conditions of a country. Here is a short list.

 literacy rate
 life expectancy
 health care
 caloric intake
 infant mortality
 other

Human Development Index [HDI]

GNP per capita is the most used indicator of development yet there are some
significant problems with it. Therefore, the United Nations Development Program
(UNDP) computes a Human Development Index for each country each year. The
human development index (HDI), composed of three indicators: life expectancy,
education (adult literacy and combined secondary and tertiary school enrollment) and

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real GDP per capita. (Note: for our purposes, GNP and GDP mean the same thing and
they are synonymous with income.)

To see the Human Development Index for individual countries go LDCs

Is it appropriate to divide the world into the More Developed Countries (MDCs) and
the Less Developed Countries (LDCs)? As stated above the author of our textbook
says no (page 29) since all countries have more developed and less developed areas
and because the most commonly used measure of development (GNP per capita)
masks the unequal distribution of income within a country. Yet, I believe that it is
useful regionalization scheme since it is still used by so many people.

We also noted that there are several commonly used synonyms for MDCs and LDCs.
Here is the list again.

Here is a map showing one view of the less developed world [LDC]. Note that regions
are inventions of geographers and different geographers, using different criteria, may
come up with different regions. Generally, most people would classify the following
realms as LDC's:

1. Sub-Saharan Africa
2. South Asia
3. Southeast Asia
4. China *
5. North Africa and Southwest Asia
6. Middle America
7. South America
8. the Pacific Realm

The more developed realms generally include:

1. North America
2. Japan *
3. Europe
4. Australia / New Zealand
5. Russia

* The author of our textbook includes the developing countries of China, Mongolia,
and North Korea in the East Asian realm which also includes the industrialized
country of Japan, and the Newly Industrializing Countries (NICs) of South Korea and
Taiwan.

One final note: Is China an LDC or an MDC? Look at the data for China found in
appendix A of your textbook. According to our measures of economic development
China is definitely a less developed country with a GNP per capita of only $620.

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