Ch36 Problems of Developing Countries(经济学,英文版-复旦,周翼).

1、0 Chapter 36 Problems of developing countries David Begg, Stanley Fischer and Rudiger Dornbusch, Economics, 6th Edition, McGraw-Hill, 2000 Power Point presentation by Peter Smith 36.1 Some key issues nLess-developed countries (LDCs) countries with low levels of per capita output nWhy have LDCs remai

2、ned poor? nThe potential roles of: comparative advantage industrialization international debt structural adjustment aid 36.2 The world distribution of income nIn 1998 there were 3.5 billion people living in low-income countries nwith average annual income of about 313 per person. nIn 1998, there wer

3、e 0.9 billion people living in high-income countries nwith average annual income of about 15,367 per person. 36.3 Welfare indicators by country group 0 20 40 60 80 100 per 1,000 live births LICMICHIC Infant mortality 19801997 0 10 20 30 40 50 % LICMICHIC Adult illiteracy 1997 MaleFemale 36.4 Problem

4、s of LDCs (1) nResource scarcity LDCs lack natural resources or the means to exploit them nCapital few domestic resources available for investment multinationals may repatriate profits, rather than reinvesting. 0 1 2 3 4 5 % p.a. LIC*MICHIC Population growth 1980-901990-98 36.5 nSocial investment in

5、 infrastructure LDCs may not be able to achieve scale economies in npower generation nroads ntelephone systems nurban housing nCustoms and ideology in SOME cases, traditional attitudes may inhibit development but this argument is often over-stated Problems of LDCs (2) 36.6 nHuman capital LDCs lack r

6、esources to invest in nhealth nnutrition neducation nindustrial training so workers in LDCs tend to be less productive than workers using the same technology in HICs. nLow productivity agriculture Many LDCs have a high proportion of their labour force engaged in low productivity agriculture. Problem

7、s of LDCs (3) 36.7 Possible paths to development? nTrade in primary products nIndustrialization nBorrowing nStructural adjustment nAid 36.8 Development: through trade in primary products? nPrimary products are agricultural goods and minerals. nComparative advantage suggests that LDCs should speciali

8、ze in primary production, BUT: some evidence suggests the terms of trade have been moving against primary products and towards manufactures prices of primary products tend to be volatile export concentration can be destabilizing 36.9 Commodity price stabilization Quantity Price DD 0 A buffer stock i

9、s an organization aiming to stabilize a commodity market. SS1 If there is a bumper harvest at SS1, P Q Exports are 0Q at price P. Exports are still 0Q at price P. The buffer stock stabilizes prices and export earnings but requires resources to buy and store. A B buffer stock buys AB C SS2 If there i

10、s a poor harvest at SS2, buffer stock sells CA. 36.10 nImport substitution is a policy of replacing imports by domestic production under the protection of high tariffs or import quotas in the short run this involves inefficient use of resources in the long run, domestic market may not be large enoug

11、h to allow scale economies and it fosters an inward-looking attitude and promotes activities in which the country begins with a comparative disadvantage Development: through import substitution? 36.11 nExport-led growth stresses production and income growth through exports rather than the displaceme

12、nt of imports nThe most successful economies of the last 3 decades have followed this route especially countries in South East Asia nBut for other countries to follow, co- operation is needed from the industrial countries to avoid over-protectionism Development: through export promotion? 36.12 nLDCs

13、 have traditionally been borrowers in world markets funds used to import capital goods to supplement domestic investment borrowing finances a current account deficit nBorrowing increased after the first OPEC oil-price shock of 1973/74 notably borrowing by non-oil developing countries . Development:

14、through borrowing? 36.13 nCountries were reluctant to borrow from the IMF under stringent conditions nso borrowed from commercial sources often at variable interest rates nhigh real interest rates in the early 1980s created debt servicing problems for many borrowers nraising the possibility of defau

15、lt nthe HIPC initiative of the late 1990s attempted to tackle the debt burden which many LDCs found unsustainable Development: through borrowing? (2) 36.14 nStructural adjustment programmes the pursuit of supply-side policies aimed at increasing potential output by increasing efficiency, e.g.: reduc

16、tions in government subsidies to industry privatization trade liberalization price reforms monetary and fiscal discipline Development: through structural adjustment? 36.15 Development: through aid? nAid is an international transfer payment from rich countries to poor countries. takes many forms: nsubsidized loans ngifts of fo