Economic Development for Developing Countries

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ECONOMIC DEVELOPMENT SUMMARY

CHAPTER 2: COMPARATIVE ECONOMIC DEVELOPMENT
(Page 65 – 73)

Created By:
PATRICIA M. A. ADAM
1006805694

International Undergraduate Program
Faculty of Economics University of Indonesia
Depok 2013
Larger Rural Populations but Rapid Rural-to-Urban Migration
One of the hallmarks of economic development is a shift from agriculture to manufacturing and services. Although modernizing in many regions, rural areas are poorer and tend to suffer from missing markets, limited information, and social stratification. However, a massive population shift is also under way as hundreds of millions of people are moving from rural to urban areas, fueling rapid urbanization, with its own attendant problems. Lower Levels of Industrialization and Manufactured Exports

Industrialization is associated with High Productivity and Incomes. It is also a hallmark of modernization and national economic power. Moreover, it is a national priority for many developing countries, including Indonesia. In developed countries, Agriculture only contributes small share to the overall employment and the same goes to Industry, which the share of employment is smaller than the developing countries, since they tend to expand their Service sector. An often suggested but controversial “Pattern of Development” is that the share of employment in industry is decreasing as the service increases as when developed-country status achieved) Furthermore, developing nations have tended to have a higher dependence on primary exports even though the goods are typically less advanced in skill and technology content. Adverse Geography

Geography plays a role in problems of agriculture, public health, and comparative underdevelopment. In tropical/sub-tropical countries for example, most of them are developing countries. They suffer from pests, diseases such as Malaria, and many others. Another case is in Africa, which most countries are landlocked countries. They tend to have lower incomes than other countries that are Coastal. Not only geographical location, the rising issue of Global Warming might also bring impact especially in African and South East countries. However, geography is not destiny, but the presence of common and often adverse geographic features in comparison to temperate zone countries means it is beneficial to study tropical and subtropical developing countries together for some purposes.

Underdeveloped Markets
Imperfect market and imperfect information which can be found mainly in developing countries creates the market less efficient. There are aspects that determine Market Underdevelopment. They lack of: 1. a legal system that enforces contracts and validates property rights 2. a stable and trustworthy currency

3. an infrastructure of roads and utilities that results in low transport and communication costs so as to facilitate interregional trade 4. a well-developed and efficiently regulated system of banking and insurance 5. substantial market information for consumers and producers about prices, quantities, and qualities of products and resources as well as the creditworthiness of potential borrowers 6. social norms that facilitate successful long-term business relationships

Lingering Colonial Impacts and Unequal International Relations Colonial Legacy
Most developing countries were once colonies of Europe or otherwise dominated by European or other foreign powers, and institutions created during the colonial period often had pernicious effects on development that in many cases have persisted to the present day. Both domestically and internationally, developing countries have more often lacked institutions and formal organizations of the type that have benefited the developed world: Domestically, on average, property rights have been less secure, constraints on elites have been weak, and a smaller segment of society has been able to gain access to and take advantage of economic...
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