Classification of Economic Development - Part I

Question 1

Classification of economic development

Answer 1

World’s countries are classified by their level of economic development

Question 2

Three classifications determined by the United Nations and its partners

Answer 2

1. Developed countries
2. Economies in Transition
3. Developing Economies

Question 3

Developed Economies

Answer 3

• Also known as industrialized or first-world countries
• Nations that are characterized by a high per capita income or strong gross domestic product (GDP)

Question 4

GDP

Answer 4

GDP is the total goods and services produced in one country in one year.

Question 5

Developed Economies characteristics

Answer 5

• A reliance on secondary and predominantly tertiary industries, rather than primary industries
• High standards of living
• Major advancements in health care and technology
• Have formed strong trade alliances, agreements and organizations

Question 6

Economies in Transition

Answer 6

Countries moving from a centrally planned economy toward a market economy

Question 7

Transition involves:

Answer 7

• Decreasing role of government
• Privatizing government assets
• Reducing tariffs
• Liberalizing markets

Question 8

Transition problems

Answer 8

1. Inflation
2. Increased unemployment
3. Widening income gaps

Question 9

Developing Economies l

Answer 9

Least Developed Countries
- Severe poverty and substandard living conditions
- Economies are predominantly agricultural or resource-based
- Lack social services (health care, education) and have poor infrastructure
- Low levels of literacy and limited access to technology

Question 10

Developing Economies ll

Answer 10

• They are in the process of moving away from agriculture and natural resources toward industrialization, manufacturing, and technology
• Skill level of workforce is steadily improving as more of the population move away from rural areas to cities

Question 11

Developing Economies lll

Answer 11

• These countries are becoming important in the world of global trade
• If a country requires improved infrastructure, Canadian businesses like Bombardier can assist with railway technology or public bus transport
• These countries can also afford Canadian exports (trade between Canada and Mexico has been increasing)

Question 12

Developing Economies llll

Answer 12

They are also a threat to Canadian businesses
- Lower labour costs
- Strong competition for Canadian products
- Weak regulatory and legal systems therefore risky investing in these countries