Diverse Structures and

Common Characteristics
Study of Developing Nations

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 Classification of Economies
 World Bank classifies 208 economies
(population=/> 30,000) based on gross
national income per capita, 2000

 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
 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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 Classification of Economies
East Asia and the Pacific:
Korea, Rep UMC
China LMC
Indonesia LIC
Europe and Central Asia:
Czech Republic UMC
Lithuania LMC
Armenia LIC
Latin America and the
Caribbean:
Brazil UMC
Cuba LMC
Nicaragua LIC 5
 Classification of Economies
Middle East and North
Africa:
Bahrain UMC
Iraq LMC
Yemen, Rep LIC
South Asia:
Sri Lanka LMC
India LIC
Sub-Saharan Africa:
South Africa UMC
Namibia LMC
Ethiopia 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 7
 Structural Diversity of Developing
Economies
 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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 Structural Diversity of Developing
Economies: Population and Income
Population GNP per
(mill) capita (USD)
Most Populous
1. China 1,261 840
2. India 1,016 460
3. USA 282 34,260
10. Japan 127 34,210
Least Populous
1. St Kitts-Nevis 41 6,660
2. Antigua and Barbuda 68 9,190
3. Dominica 73 3,260
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 Structural Diversity of Developing
Economies: Industrial structure
Country % of L Force % of GDP
Agriculture Industry Agriculture Industry
Nigeria 54 5 43 25

Bangladesh 64 14 30 18
Brazil 31 27 14 36
All 60 17 20 38
Developing
USA 2 25 2 29

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 Structural Diversity of Developing
Economies: Important observations
 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
 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
 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 1980-90 1990-2000
Africa:
Kenya 0.3 -0.3
Nigeria -3.0 -0.4
Asia:
India 3.2 4.2
South Korea 8.9 4.7
Latin America:
Brazil 0.6 1.5
Mexico -0.9 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 15.6
Caribbean*
Middle East and N. Africa 2.4 1.9
South Asia* 44 40
Sub-Saharan Africa* 47.7 46.3
Total 29 24

* Increase in absolute number of people 20

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 HDI rank
GNP per cap~ PPP $1000
Kenya 0.514 123
Uganda 0.435 141
GNP per cap~ PPP $2000
Vietnam 0.682 101
Pakistan 0.498 127
GNP per cap~ PPP $3000
Sri Lanka 0.735 81
Indonesia 0.677 102
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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:
 Economies of scale
 Thin markets for many products due to limited
demand
 Widespread externalities (good and bad)
 Prevalence of common property resources
 Incomplete information
 Information is costly to obtain

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