development gap
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The document discusses development gaps between rich and poor countries. It provides definitions and classifications of development gaps. There are three stages of economic development: preparatory, take-off, and self-sustained growth. There are large income gaps between nations and people, classified as North-South divide and by continent or World Bank definitions. Measures of development gaps include absolute income gap, relative income gap, standard deviation, coefficient of variation, and Gini ratio. These measure differences in per capita income levels and dispersion to quantify narrowing or widening of gaps over time.
![Reference
Development Economics [9th Edition] - THIRLWALL
3.There is World or global Inequality,which takes the individual person or household,not the
country,as the unit of measurement,and therefore takes into account not only difference in
income between countries,but also between people within countries](https://image.slidesharecdn.com/presentation-191221124914/85/development-gap-12-320.jpg)
development gap
- 2. Development Gap Development Gap refers to the widening difference in levels of development between the world’s richest and poorest countries. In order to have a better understanding of these development gaps,Economists have broadly divided the process of Economic development in to 3 stages: 1. The preparatory stage 2. The take-off stage 3. The stage of self sustained growth
- 3. The Development gap and income distribution in the world economy The worlds income is distributed extremely unequally between nations and people. There are many ways of classifying these divisions in the world economy: 1. North-south divide it is a very basic level There is the division between rich industrialized countries, mainly concentrated in the northern hemisphere and poorer non- industrialized countries in the southern hemisphere. 2. Division between continents There is division between the developed continents of Europe and North America on the one hand, and the continents of Asia, Africa and Latin America on the other.
- 4. 3. World bank It was established by Bretton woods Agreement in 1944 as a development agency to lend to poor countries, Classifies these countries in its annual world Development Report into Three board catergories: 1. Low –income countries 2. Middle –income countries - again split into * lower middle-income * Upper middle-income 3. Highincome countries
- 5. For Example: The level of per capita income in 2007 for all countries # low income countries containing nearly one billion people – average level of income per head is only $484 per annum. #lower to middle income – containing 3.6 billion people – level of per capita income is $1,832 per annum. #High income countries containing $38,195. As a result, * The poorest country is Burundi with $124. * The richest country is Norway with $82,815.
- 6. Measures of Development gap and Inequality
- 7. Measures of Development gap The Measurement of Development gaps between the developed countries and the developing countries is not very Easy . Some of the measures are : 1. The Range or Absolute income gap 2. Relative income gap 3. Standard deviation 4. Coefficient of variation 5. Gini ratio
- 8. 1. The Range or absolute income gap method: One of the measure is range or absolute income gap between the richest and poorest countries. The absolute method measure the difference in the per capita income of developed and developing countries. After a period of Economic development,if there is a decrease in the difference in the per capita income of those countries,the development Gap is getting narrowed. If there is a increase in the difference in the per capita income of those countries, the development gap is getting widen.
- 9. 2. The Relative income gap method The relative income gap method,which is the ratio of the richest country to the poorest country. According to the Relative method,if the gap is to narrow down the relative position of the developing countries must improve. 3.The standard deviation: It is a well known statistical measure of dispersion is the standard deviation, which measures the average sum of the squared deviation of each country per capita income from the average income for all countries. It is also called squared root of the variance. Standard deviation denoted by SD SD is measured as: Yi is the per capita income of country i
- 10. Y=Average level of per capita income of the whole sample n=number of countries 4.The co-efficient of variation The relative measure of standard deviation (SD) is called co-efficient of variation. It is defined as the ratio of standard deviation (SD) to mean deviation expressed in percentage % . The co-efficient of variation is denoted by CV. CV = SD/mean ×100 Where,CV is the co-efficient of variation.It is independent units of measurement. SD is the standard deviation. There is a positive correlation between the mean and standard deviation.
- 11. 5.Gini Ratio The Gini ratio is derived from the Lorenz curve. Lorenz curve is used to measure the inequality in the distribution of income. Three measures of inequality need to be clearly distinguished in using the Gini ratio. 1.Thereis lnternational inequality,with each country treated as a single unit and given equal weight in the measure. 2.There is international inequality ,with each country treated as a single unit but weighted by its size of population.
- 12. Reference Development Economics [9th Edition] - THIRLWALL 3.There is World or global Inequality,which takes the individual person or household,not the country,as the unit of measurement,and therefore takes into account not only difference in income between countries,but also between people within countries