ECON - Comparing Levels of Economic Development Between Countries [LESSON]

Comparing Levels of Economic Development  within Countries

In this lesson, you will learn how to analyze and compare levels of economic development among countries worldwide by examining key economic indicators such as Gross Domestic Product (GDP) per capita. Additionally, we'll explore demographic and social indicators such as literacy rate, life expectancy, and access to healthcare. These indicators are often clumped together and described as “standard of living.” They serve as crucial metrics for assessing economic development and understanding its impact on society. By analyzing these factors, we'll gain a comprehensive understanding of how countries' economic landscapes vary and how they can be compared to one another.

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Comparing Levels of Economic Development Between Countries

Analyzing Economic Indicators

Let's start by determining the significance of one key economic metric: Gross Domestic Product (GDP) per capita. “Gross” in this case does not mean “yucky.” It means “total.” “Domestic” means “at home” or “in one defined place.” And “product” means anything that can be produced, meaning created, or manufactured. GDP is like a nation's financial report card, measuring the total value of all goods and services produced within its borders during a specific period, usually a year. The more people a country has, the more likely there is greater production. More people can produce more. However, GDP per capita takes that total value and divides it by the country's total population, giving us a measure of average production per person. It is an indicator of the average economic output of a country. Obviously, new-born babies are not on an assembly line producing goods. However, putting it in terms of “per person” gives us an idea for how that production is “spread” throughout the country. For example, a high GDP per capita signals a strong economy where people, on average, contribute significantly to the nation's overall wealth. On the other hand, a low GDP per capita may indicate economic challenges and lower productivity levels.

To make sense of this, let's explore real-life examples of countries to help us understand how economic productivity varies globally. Click each tab to explore the interactive maps below.

Even though they use different color schemes, what do you notice? Which regions of the world and which countries have the highest GDPs and GDPs per capita?

Now, let’s look at the same data, but in a different form.

And now, how about a chart of GDP per capita in 2021?

What happened? Why are some countries not visible on the list of top total GDP but suddenly near the top in GDP per capita? It all deals with the total population. It involves a little math. The greater the number we divide by, the lesser the quotient, or result is. So, countries with very large populations, like China for example, are likely to have a lesser GDP per capita. And the opposite is also true. The lesser the number we divide by, the greater the quotient. So, countries with smaller populations, but still relatively productive economies, find themselves near the top of GDP per capita lists. Go ahead and research the total populations of those countries toward the top of the per capita list. How many people live there? This is why economic geographers often prefer to use GDP per capita as a measure of economic development because it offers insight into how production is distributed across the population.

Exploring Demographic and Social Factors

Which came first, the chicken, or the egg? It’s an age-old question. In this section we’re going to explore the demographic and social factors associated with economic development. And it brings up the question, which came first? Did the economic development lead to improved demographic and social indicators, or vice versa? For example, does increased economic production lead to greater life expectancies because people have more money for medical services? Or does an increase in life expectancy lead to greater economic production because people are living longer and have more years to produce? The answer is probably a little bit of both. Regardless, there is a clear connection between economic productivity and various demographic and social indicators like life expectancy. Let’s explore.

Economic development isn't just about money; it's about people too. Take literacy rate, for instance. It's not just about knowing how to read and write; it's a cornerstone for building a knowledgeable workforce, which in turn fuels economic growth. Click each tab to explore each interactive graph.

These relationships are not coincidental or accidental. Economic development often determines demographic and social indicators and vice versa. Sometimes it can be difficult to analyze data like that. However, it is important for economic geographers to understand these relationships to help inform policymakers.

Understanding Global DisparitiesA choropleth world map of income groups, generally showing high-income groups in North America, Western Europe, and a few other places of the world whereas low-income groups are generally in Africa and parts of Asia.

Now, let's zoom out and confront the stark realities of global economic disparities. To grasp these disparities, economic geographers often categorize countries into different groups based on their economic development levels. You might have heard terms like "developed" and "developing" countries, which broadly classify nations based on their economic status and level of industrialization. Developed countries, also known as "high-income" countries, boast gleaming skyscrapers, efficient infrastructure, and enviable living standards. On the other hand, developing countries, including "middle-income" and "low-income" nations, grapple with challenges such as poverty, inadequate healthcare, and lack of infrastructure. It is important to understand though, that all economies are “developing” in the sense that all economies are attempting to “develop” or expand their economies.

But the story doesn't end there. Within the global economic landscape, there's a spectrum of development spanning from the most advanced economies to the least developed ones. We can further divide countries into categories like "core," "semi-periphery," and "periphery" based on their roles within the global economic system.

Core countries are typically found in North America, Western Europe, and parts of Asia, have significant economic power and dominate global trade and finance. Some suggest these “core” countries have exploited periphery countries over the years through colonialization and other means.

Semi-periphery countries, like the BRICS bloc of Brazil, Russia, India, China, and South Africa, occupy an intermediate position, benefiting from industrialization and trade but still facing challenges such as income inequality and infrastructure gaps. In late 2023 at the BRICS Summit, the BRICS bloc agreed to add the new member countries of Saudi Arabia, Iran, Ethiopia, Egypt, Argentina and the United Arab Emirates. They also did not close the door to future expansion. These BRICS countries are characterized by their rapidly growing economies and substantial populations. They challenge traditional ideas of economic power and influence. BRICS countries often collaborate on economic and political issues, seeking to amplify their collective voice on the world stage and reshape global political and economic structures.

Meanwhile, periphery countries, often located in Africa, Central America, and parts of Asia, struggle with limited access to resources, underdeveloped infrastructure, and economic dependence on more powerful nations.

Use an analogy of an apple. The “core” countries are at the center of the global economy. The “semi-periphery” countries are close to the center of the global economy. The “periphery” countries are on the outside of the global economy.

So, why is it the way that it is? What caused it? There are theories throughout the social sciences to help answer that question, like The World Systems Theory popularized by Immanuel Wallerstein in 1974 that coined the use of the terms “core,” “semi-periphery,” and “periphery.” For this course's purposes, however, understanding these categorizations and the complex dynamics at play, including the rise of BRICS countries, we can begin to understand the root causes of global economic disparities. Historical legacies, colonialism, geopolitical factors, and global trade dynamics all contribute to shaping the economic positions of nations.

For more about the development of countries around the world, please watch this video:

Reflection

As we wrap up this lesson, take a moment to reflect. How do we measure and compare the economic development of countries? It's not just about crunching numbers; it's about understanding the intricate web of factors that shape economies and societies. By analyzing economic indicators, demographic data, and social factors, we gain valuable insights into the diverse economic landscapes of our world.

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