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Chapter 2

Divers Structures and Common Characteristics of Developing Nations

In Chapter 2 key terms are noted but which are missing?  Of those used, what are their implications, limitations and relevance?  For my part, key concepts used in the chapter break out into:

·         Demographics (biological reality) of which it has been said “Demography is destiny!”;

·         Economics with its arsenal of metrics, concepts of efficiency, effectiveness and equity and its materialistic concerns;

·         Politics with its hierarchy of power exercised at the local, regional, national and international levels; and,

·         Undefined including concepts used but not formally defined by the authors.  These include ‘soft’ issues like Culture, Education, Ethnicity, Language and Religion

Below I list definitions of key concepts by category and will speak to each.



Brain drain  The emigration of highly educated and skilled professional and technical manpower from the developing to the developed countries.

Crude birthrate  The number of children born alive each year per 1,000 population (a crude birthrate of 20 per 1,000 is the same as a 2% increase).  See also fertility rate and death rate.

Death rate The yearly number of deaths per 1,000 population - an annual crude death rate of 15 per 1,000 would involve 1.5% of the population.  See also crude birthrate and infant mortality rate.

Dependency burden  The proportion of the total population aged 0 to 15 and 65+, which is considered economically unproductive and therefore not counted in the labor force.  In many LDCs, the population under the age of 15 accounts for almost half of the total population, thus posing a burden to the generally small productive labor force and to the government, which has to allocate resources on such things as education, public health, and housing for the consumption of people who don’t contribute to production.

Fertility rate  The yearly number of children born alive per 1,000 women within the childbearing age bracket (normally between the ages of 15 and 49 years).  See also crude birthrate.  The total fertility rate (TFR) is the number of children that would be born to a woman if she were to live to the end of her childbearing years and bear children at each age in accordance with the prevailing age-specific fertility rates.

Infant mortality rate  Deaths among children between birth and 1 year of age per 1,000 live births

Malnutrition  A state of ill health resulting from an inadequate or improper diet, usually measured in terms of average daily protein consumption.



Absolute poverty  A situation where a population or section of a population is, at most, able to meet only its bare subsistence essentials of food, clothing, and shelter to maintain minimum levels of living.  See also international poverty line and subsistence economy.

Foreign exchange  Claims on a country by another held in the form of currency of that country.  The foreign-exchange system enables one currency to be exchanged for (converted into) another, thus facilitating trade between countries.  See also exchange rate and foreign reserves.

Gini coefficient  An aggregate numerical measure of income inequality ranging from 0 (perfect equality) to 1 (perfect inequality).  It is measured graphically by dividing the area between the perfect equality line and the Lorenz curve by the total area lying to the right of the equality line in a Lorenz diagram.  The higher the value of the coefficient, the higher the inequality of income distribution; the lower it is, the more equitable the distribution of income.

Gross domestic product (GDP)  The total final output of goods and services produced by the country’s economy, within the country’s territory, by residents and nonresidents, regardless of its allocation between domestic and foreign claims.  See also gross national product (GNP).

Gross national product (GNP)  The total domestic and foreign output claimed by residents of a country.  It comprises gross domestic product (GDP) plus factor incomes accruing to residents from abroad, less the income earned in the domestic economy accruing to persons abroad.  See also national income.

Human resources  The quantity and quality of a nation’s labor force.

Imperfect market  A market where the theoretical assumptions of perfect competition are violated by the existence of, for example, a small number of buyers and sellers, barriers to entry, non-homogeneity of products, and incomplete information.  The three imperfect markets commonly analyzed in economic theory are monopoly, oligopoly, and monopolistic competition.

Income gap  The gap between the incomes accruing to the bottom (poor) and the top (rich) sectors of a population.  The wider the gap, the greater the inequality in the income distribution.  Also, the gap between income per capita levels in rich and poor nations.  See Gini coefficient.

Income inequality  The existence of disproportionate distribution of total national income among households whereby the share going to rich persons in a country is far greater than that going to poorer persons (a situation common to most LDCs).  This is largely due to differences in the amount of income derived from ownership of property and to a lesser extent the result of differences in earned income.  Inequality of personal incomes can be reduced by progressive income taxes and wealth taxes.  See also Gini coefficient and Lorenz curve.

International poverty line  An arbitrary international real income measure, usually expressed in constant dollars (e.g., $1 per day), used as a basis for estimating the proportion of the world’s population that exists at bare levels of subsistence.

Labor productivity  The level of output per unit of labor input, usually measured as output per worker-hour or worker-year.

Levels of living  The extent to which a person, family, or group of people can satisfy their material and spiritual wants.  If they are able to afford only a minimum quantity of food, shelter, and clothing, their levels of living are said to be very low.  If they enjoy a great variety of food, shelter, clothing, and other things, such as good health, education, and leisure, they are enjoying relatively high levels of living.  See development.

Lorenz curve  A graph depicting the variance of the size distribution of income from perfect equality.  See also Gini coefficient.

Low-income countries (LIC5)  Countries with a gross national income per capita of less than $755 in 2000.

Middle-income countries (MICs)  LDCs with per capita income above $755 and below $9,265 in 2000 according to World Bank measures.

Newly industrializing countries (NICs)  A small group of countries at a relatively advanced level of economic development with a substantial and dynamic industrial sector and with close links to the international trade, finance, and investment system (Argentina, Brazil, Greece, Mexico, Portugal, Singapore, South Korea, Spain, and Taiwan).

Physical resources  The non-human factors of production (land and capital) used to produce goods and services to satisfy wants.

Primary industrial sector  The part of the economy that specializes in the production of agricultural products and the extraction of raw materials.  Major industries in this sector include mining, agriculture, forestry, and fishing.

Production function  A technological or engineering relationship between the quantity of a good produced and the quantity of inputs required to produce it.

Purchasing power parity (PPP)  The purchasing power of a country’s currency: the number of units of that currency required to purchase the same basket of goods and services that a U.S. dollar would buy in the United States.

Resource endowment  A nation’s supply of factors of production.  Normally such endowments are supplied by nature (e.g., mineral deposits, raw materials, timber forests, labor).  See also factor endowment trade theory.

Secondary industrial sector  The manufacturing portion of the economy, which uses raw materials and intermediate producer goods to produce final goods or other intermediate products.  Industries such as motor assembly, textiles, and building and construction are part of this sector.

Tertiary industrial sector  The services and commerce portion of an economy.  Examples of services include repair and maintenance of capital goods, haircuts, public administration, medical care, transport and communications, finance, and teaching.  See also primary and secondary industrial sectors and services.



Human Development Index (HDI)  An index measuring national socioeconomic development, based on measures of life expectancy at birth, educational attainment, literacy, and adjusted real per capita income.

Mixed economic systems  Economic systems that are a mixture of both capitalist and socialist economies.  Most developing countries have mixed systems.  Their essential feature is the coexistence of substantial private and public activity within a single economy.

World Bank  An international financial institution owned by its 181 member countries and based in Washington, D. C.  Its main objective is to provide development funds to developing nations in the form of interest-bearing loans and technical assistance.  The World Bank operates with borrowed funds.  See International Development Association


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