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Developed vs Developing Economies Overview

Apr 11, 2025

Chapter 22: Growing Economies

1. Developing and Developed Countries

Developed Countries

  • High income level
    • High GDP per capita.
  • High literacy rate
    • Majority of the population can read and write.
  • High life expectancy
  • Good infrastructure
    • Access to schools, colleges, healthcare, railways, etc.
  • Highly industrialized
    • Relies heavily on the tertiary sector rather than the primary sector.
  • Low population growth

Developing Countries

  • Low income level
    • Lower income per capita.
  • Low literacy rate
    • Limited resources for education; small portion of the population can read and write effectively.
  • Low life expectancy
  • Poor infrastructure
    • Lack of roads, railways, schools, hospitals, and production facilities.
  • Reliance on the primary sector
    • Large proportion of citizens rely on agriculture, mining.
  • High population growth

2. Emerging Economies

  • Defined by rapid growth, usually measured by GDP.
  • Examples: BRICS (Brazil, Russia, India, China, South Africa)

3. Implications of Economic Growth for Individuals and Business

3.1 Trade Opportunities

  • Economic growth leads to increased consumption and higher disposable incomes.
  • Attractive for firms looking to invest or sell products and services.

3.2 Employment Patterns

  • Businesses may want to assess employment patterns across economies.

4. Indicators of Growth

4.1 Gross Domestic Product (GDP) per Capita

  • Defined as all goods and services produced in a year divided by the population.

Benefits

  • Indicates average revenue per capita.
  • Simple and widely used.
  • Facilitates comparison among countries.

Drawbacks

  • Does not indicate the standard of living; higher GDP may coincide with higher cost of living.
  • Excludes negative externalities.
  • Excludes non-monetary jobs (e.g., charities).

4.2 Human Development Index

  • Life Expectancy: Measures average lifespan, indicating healthcare system quality.
  • Mean Years of Schooling: Average education level of a 25-year-old.
  • Gross National Income (GNI) per Capita: Illustrates population's relative wealth (measured as PPP).