Whitman ECON 102 - PowerPoint Lectures for Principles of Macroeconomics

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Slide 1Slide 2Slide 3Slide 4Slide 5Slide 6Slide 7Slide 8Slide 9Slide 10Slide 11Slide 12Slide 13Slide 14Slide 15Slide 16Slide 17Slide 18Slide 19Slide 20Slide 21Slide 22Slide 23Slide 24CHAPTER 21 Economic Growth in Developing and Transitional Economies© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Macroeconomics 9e by Case, Fair and Oster1 of 23PowerPoint Lectures for Principles of Macroeconomics, 9eBy Karl E. Case, Ray C. Fair & Sharon M. Oster ; ;CHAPTER 21 Economic Growth in Developing and Transitional Economies© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Macroeconomics 9e by Case, Fair and Oster2 of 23CHAPTER 21 Economic Growth in Developing and Transitional Economies© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Macroeconomics 9e by Case, Fair and Oster3 of 2323Life in the Developing Nations: Population and PovertyEconomic Development: Sources andStrategiesThe Sources of Economic DevelopmentStrategies for Economic DevelopmentGrowth versus Development: The PolicyCycleTwo Examples of Development: Chinaand IndiaIssues in Economic DevelopmentPopulation GrowthThe Transition to a Market EconomySix Basic Requirements for SuccessfulTransitionCHAPTER OUTLINEPART V THE WORLD ECONOMYEconomic Growth inDeveloping andTransitional EconomiesCHAPTER 21 Economic Growth in Developing and Transitional Economies© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Macroeconomics 9e by Case, Fair and Oster4 of 23Economic Growth in Developing and Transitional EconomiesAll economic analysis deals with the problem of making choices under conditions of scarcity, and the problem of satisfying people’s wants and needs is as real for Somalia and Haiti as it is for the United States, Germany, and Japan. The universality of scarcity is what makes economic analysis relevant to all nations, regardless of their level of material well-being or ruling political ideology.Even though economic problems and the policy instruments available to tackle them vary across nations, economic thinking about these problems can be transferred easily from one setting to another.CHAPTER 21 Economic Growth in Developing and Transitional Economies© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Macroeconomics 9e by Case, Fair and Oster5 of 23Life in the Developing Nations: Population and PovertyTABLE 21.1 Indicators of Economic DevelopmentCountry GroupPopulation,2006Gross National Income per Capita,2006(dollars)Literacy Rate(percent over15 yearsof age)Infant Mortality, 2006 (deaths before age 5 per 1,000 births)InternetUsers per1,000 people,2005Low-income 2.3 billion 510 29 122.0 30Lower middle-income2.4 billion 1,580 75 42.0 47Upper middle-income 575.9 million 4,770 243 29.7 72High-income 1.0 billion 32,040 2,977 7.0 76Source: World Bank, www.worldbank.orgCHAPTER 21 Economic Growth in Developing and Transitional Economies© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Macroeconomics 9e by Case, Fair and Oster6 of 23Life in the Developing Nations: Population and PovertyWhile the developed nations account for only about one quarter of the world’s population, they are estimated to consume three-quarters of the world’s output. This leaves the developing countries with about three-fourths of the world’s people but only one-fourth of the world’s income.The simple result is that most of our planet’s population is poor.CHAPTER 21 Economic Growth in Developing and Transitional Economies© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Macroeconomics 9e by Case, Fair and Oster7 of 23Economic Development: Sources and StrategiesThe Sources of Economic DevelopmentCapital Formationvicious-circle-of-poverty hypothesis Suggests that poverty is self-perpetuating because poor nations are unable to save and invest enough to accumulate the capital stock that would help them grow.capital flight The tendency for both human capital and financial capital to leave developing countries in search of higher expected rates of return elsewhere with less risk.CHAPTER 21 Economic Growth in Developing and Transitional Economies© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Macroeconomics 9e by Case, Fair and Oster8 of 23Economic Development: Sources and StrategiesThe Sources of Economic DevelopmentHuman Resources and Entrepreneurial Abilitybrain drain The tendency for talented people from developing countries to become educated in a developed country and remain there after graduation. Social Overhead Capitalsocial overhead capital Basic infrastructure projects such as roads, power generation, and irrigation systems.CHAPTER 21 Economic Growth in Developing and Transitional Economies© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Macroeconomics 9e by Case, Fair and Oster9 of 23Economic Development: Sources and StrategiesThe Sources of Economic DevelopmentSocial Overhead CapitalCorruptionThe following chart shows the World Bank’s rating of corruption levels in a number of countries around the world. The countries are ranked from those with the strongest controls on corruption—Germany and France—to those with the lowest controls—Pakistan and Nigeria. Indonesia, as you can see, is near the bottom of the list.CHAPTER 21 Economic Growth in Developing and Transitional Economies© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Macroeconomics 9e by Case, Fair and Oster10 of 23Economic Development: Sources and StrategiesStrategies for Economic DevelopmentAgriculture or Industry?TABLE 21.2 The Structure of Production in Selected Developed and Developing Economies, 2003CountryPer-CapitaGross National Income (GNI)Percentage of Gross Domestic ProductAgriculture Industry ServicesTanzania $ 375 45 17 37Bangladesh 480 20 28 52China 2,010 12 47 41Colombia 2,740 12 34 54Thailand 2,990 10 46 44Brazil 4,730 5 31 64Korea (Rep.) 17,690 2 23 75Japan 38,410 2 30 68United States 44,970 2 23 75Source: World Bank, World Development Indicators, 2008; Sectoral numbers for U.S. and Japan are for 2003.CHAPTER 21 Economic Growth in Developing and Transitional Economies© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Macroeconomics 9e by Case, Fair and Oster11 of 23Economic Development: Sources and StrategiesStrategies for Economic DevelopmentExports or


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