The document discusses the classification and measurement of developing countries based on income levels, human capital, and the Human Development Index (HDI). It outlines the characteristics of the developing world, highlighting commonalities and diversities, including low productivity, high inequality, and the impact of historical colonialism. Key indicators of development such as GNI per capita, life expectancy, and literacy are also emphasized.

1. COMPARATIVE ECONOMIC
DEVELOPMENT
by:
JEM DIANE A. MAYORDOMO, RN

2. 2.1 Defining the Developing World
Developing World is defined
popularly based on the per capita income.
International agencies that defined it:
• Organization for Economic Cooperation
and Development (OECD)
• United Nations(UN)
• International Bank for Reconstruction
and Development (IBRD), more
commonly known as the World Bank.

3. The World Bank’s classification system on
213 economies are ranked by their levels of
gross national income (GNI) per capita. These
economies are classified as:
Low-income countries (LICs)
Lower-middle-income countries (LMCs)
Upper middle-income countries(UMCs)
High-income OECD countries
High-income countries. (Often, LMCs and
UMCs are informally grouped as the middle-
income countries.)
Developing countries are those with low-,
lower-middle, or upper-middle incomes.

4. Newly Industrializing Countries (NICs):
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.
Least Developed Countries : low income, low
human capital, and high economic vulnerability.
Human Capital: Productive investments in
people, such as skills, values, and health
resulting from expenditures on education, on-
the-job training programs, and medical care.

5. 2.2 Measuring Development for
Quantitative Comparison Across
Countries
The most widely used measure for
comparative status of socioeconomic
development is presented by the United
Nations Development Programme (UNDP)
Human Development Index (HDI)
An index, based on combining
measures of education, health, and
adjusted real income per capita.

6. The New Human Development Index
(NHDI) ranks each country on a scale of 0
(lowest human development) to 1 (highest
human development) based on three goals
or end products of development:
• a long and healthy life as measured by
life expectancy at birth;
• knowledge as measured by a
combination of average schooling
attained by adults and expected years of
schooling for school-age children;
• decent standard of living as measured
by real per capita gross

7. Computing the NHDI – uses an
arithmetic mean (adding up the
component indexes and dividing by 3) in
the HDI, the effect is to assume perfect
substitutability across income, health,
and education.
Domestic product are adjusted for the
differing purchasing power parity of each
country’s currency to reflect cost of living
and for the assumption of diminishing
marginal utility of income.

8. 2.3 Basic Indicators of Development
Three Facets of Development:
• Real income per capita adjusted for
purchasing power
• Health as measured by life
expectancy, undernourishment, and
child mortality
• Educational attainments as
measured by literacy and schooling

9. Gross National Income (GNI) per
capita, the most common measure
of the overall level of economic activity, is
often used as a summary index of
the relative economic well-being of
people in different nations.
• the total domestic and foreign value
added
Gross Domestic Product (GDP)
measures the total value for final use of
output produced by an economy, by both
residents and nonresidents.

10. Purchasing Power Parity (PPP) is calculated
using a common set of international prices for
all goods and services.
Life Expectancy is the average number of
years newborn children would live if subjected
to the mortality risks .
Undernourishment means consuming too
little food to maintain normal levels of activity; it
is related to problem of hunger.
High Fertility uncontrolled population growth.
Literacy is the fraction of adult males and
females reported with basic abilities to read
and write.

11. 2.4 Characteristics of the Developing
World: Diversity with Commonality
There are important historical and
economic commonalities among
developing countries that have led to their
economic development problems.
It is important to bear in mind that there is
a great deal of diversity throughout the
developing world, even within these areas
of broad commonality.

12. 10 major areas of “diversity within
commonality” in the developing world.
1. Lower levels of living and productivity.
2. Lower levels of human capital.
3. Higher levels of inequality and
absolute poverty.
4. Higher population growth rates.
5. Greater social fractionalization.
6. Larger rural populations but rapid
rural-to-urban migration.
7. Lower levels of industrialization.

13. 8. Adverse geography.
9. Underdeveloped financial and
other markets.
10. Lingering colonial impacts such
as poor institutions and often
external dependence.

14. THANKYOU…