Characteristics of Developing Countries Indicators of Development

The Developing World  There are three facets of development:

 The most common way to define the  real income per capita
developing world is by per capita adjusted for purchasing power
income.
 health as measured by life
 The best known classification of expectancy,
countries by economic status is that of undernourishment, and child
the International Bank for mortality
Reconstruction and Development
 educational attainments as
(IBRD), more commonly known as the
measured by literacy and
World Bank.
schooling.
 Low-income countries (LICs) are
 Purchasing power parity (PPP)
defined as having a per capita income
is defined as the number of
gross national income in 2008 of $975
units of a foreign country’s
or less.
currency required to purchase
 Lower-middle-income countries (LMCs) the identical quantity of goods
have incomes between $976 and and services in the local
$3,855. developing country market as
$1 would buy in the United
 Upper-middle-income countries
States.
(UMCs) have incomes between $3,856
and $11,906.  The PPP provides a more
accurate comparison of living
 High-income countries (HICs) have
standards.
incomes $11,907or more.
 The most widely used measure
 Newly industrializing countries (NICs)
of the comparative status of
are countries that have achieved
socioeconomic development is
relatively advanced level of economic
presented by the United
development with a substantial and
Nations Development Program
dynamic industrial sector and with
(UNDP) in its annual series of
close links to the international trade,
Human Development Reports.
finance, and investment system.
 The Human Development
 NICs is a special distinction made
Index (HDI) attempts to rank
among upper-middle-income or newly
all countries on a scale of 0 to
high-income economies.
1 based on three goals of
 Another widely used classification is development:
that by the United Nations.
 longevity
 Least developed countries have low
 knowledge
income, low human capital, and high
economic vulnerability.  standard of living
Characteristics of Developing Countries

 Lower levels of living and productivity

 Lower levels of human capital

 Higher levels of inequality and

absolute poverty

 Higher population growth rates

 Greater social fractionalization

 Larger rural populations but rapid

rural-to-urban migration

 Lower levels of industrialization and

manufactured exports

 Adverse geography

 Underdeveloped markets

 Lingering colonial impacts and unequal

international relations