“ Are developing nations really developing”

- Fact or illusion?

Presented by –
Devriti Rajya Laxmi Rana
Arpit bansal
Megha Gandotra
Aradhana Dogra
Harleen Kalra
Varun Pratap Singh
 Developing Countries
Definition
 A Developing country is a term that describes a nation that has a low level of material well-being. The levels of
development vary widely within so-called developing countries. Some developing countries have high average standards of
living compared to others.
 IMF and World Bank classify countries, under this category, based on their different criteria's. For Example, The IMF uses a
flexible classification system that considers -

(1) Per capita income level,

(2) Export diversification and
(3) Degree of integration into the global financial system.

Characteristics

 Developing economies have certain characteristics that separate them from least developed countries and developed
countries. Lets take a look at some of these characteristics -

 Low income levels

 Limited or insufficient use of resources.
 Dependence on agricultural production
 Low rate of Economic Growth.
 High Population growth Rate.
 Low Life Expectancy.

Almost all developing countries are poor in money terms. But they are diverse in culture, economic conditions and
social and political structures.
Based on these certain characteristics, the following are a few
developing countries that we will look at in depth –

India

China

Brazil

Russia

Thailand

South Africa
Are Developing Nations really Developing?
Looking at the growth of developing countries, it is hard to
refuse the fact that these countries are really developing.
High GDP growth, high literacy figures, stable political
structures and a few other factors are helping them to a fast
growing economy.
They are also contributing higher to the global economy
compared to the developed countries and according to the
IMF and the World Bank, by 2025, the world will have a new
Superpower, India, that is a developing nation.
The trade surpluses and increased level of power in the
global trade is also adding to their overall development.
China and India together
 Developing Nations are “not” developing
Due to the recent global economic recession and stock
markets plunging everywhere in the world, these developing
nations are facing severe growth issues and thus producing
a hinder to their development.
Dependence mainly on agricultural activities, is another
reason for their slow or insignificant development as most of
these countries depend on agriculture as the country’s main
activity, rather than focusing on industrial and agricultural
activities together.
High population growth rate also dampens the
development as it is hard for a country to cater to a growing
amount of people with limited resources, which have not
been fully exploited.
 India
 60 years since freedom, India is still being called a developing country.

Pre – Liberalization (till 1991): Economic Reforms

 The Indian financial system, till the early 90`s, was a closed system with its main
characteristics being –
 an administered structure of restrictive acts,
 interest rates,
 restrictions on all market participants--including banks, FI (Financial Institutions) & corporate.
 FOREX markets were fully controlled with a very few opportunities
 The overall economic and monetary system was very weak with fiscal deficit circles emerging year on
year.

Post – Liberalization (1991 to 2010)

After 1991 the economic reforms took place and emphasis was laid down on decontrolling of the
financial sector and markets.
 FOREX policies were liberalised;
 FERA and MTRP restrictions were also reduced.
 Steps were taken to open the economy by making imports simpler and promoting exports.
 The government and regulatory bodies laid down the short term objective of creating liquidity and
providing incentives to promote immediate financial injection in the dead system.
 India
1991 and Current
Before

5.3 7.2
GDP Growth Rate (%)

Population Growth 23.85 21.34

Rate(%)

Per Capita Income $468 $1040

Literacy Rate (%)

 Loopholes
India is one of the fastest developing country in the
world. But you can see the fact that the speed of the
development is not as good when compared to the other
countries that are already developed and that are much
superior than India. 
High population Growth Rate, Corruption, High infant
mortality rate, Low Life Expectancy compared to developed
nations are a few reasons for the slow development of India.
India is ensuring that the level of literacy is also increasing
as low literacy rates lower the development and India has
ensured that education is considered as one of the most
important factors for it to grow into a superpower.
Brain Drain being another important loophole in their
growth, as citizens are getting better salary packages abroad.
 China
The economic strength of China has recorded
significant growth over the last three decades through
reform and opening up. 
According to the list of economies published by the World
Bank in July 2005, China is considered a lower-middle-
income country with per capita incomes ranging between
$826-$3255, and in terms of its foreign debt, it is a less
indebted country. 
Increased participation in world trade is crucial for China's
economic growth. The world's economic community has
granted China special development assistance in order for it
to strengthen its market before conforming to international
economic standards. 
 China
1998 Current

7.8 8.9
GDP Growth Rate (%)

Population Growth 1.0 0.5

Rate(%)

Per Capita Income $910 $3180

Literacy Rate (%) 92.1 93.3

Loopholes
 According to the World Bank, China's per capita GDP in 2009 stood at 3,687 U.S. dollars a year, ranking 103
worldwide, far less than the per capita GDP of the United States, which is 46,436 dollars. In terms of per capita
possession of natural resources, China is far behind the majority of the developed world, with fresh water reserve
only 1/3 of the world’s average, coal consumption 1/2, and natural gas 1/5.

 In China, 150 million people, equivalent to the total Russian population, are caught in poverty according to the
UN standard, living on less than 1 US dollar a day.

 China is still at the lower end of the global industrial chain. Their trade mix is dominated by commodity trade
that is resource and labour consuming. Due to the modest production level and dependence on conventional
industries with low added value, the energy intensity of China’s GDP is much higher than the world’s average,
let alone that of the developed countries.

 China’s shortfalls in scientific and technological innovation capacity hinder their core-competitiveness. Across
China, industrial structure and the development between urban and rural areas and among different regions
remain quite unbalanced. Apart from these, they are also faced with challenges such as lack of investment in
education, medical services, and social security.

 China is a “rising & developing” country. Both 'rising' and 'developing' are an ongoing process, suggesting that
the development of China is not a one off task.

 Their remarkable achievements in economic and social development have not changed the fact that they are still
a developing country. And being a developing country provides them with time, room and potential for further
growth.
 Brazil
 Until 1974 Brazil's GDP was among the highest in world ranking , 7.4%. But Brazil was
absorbed into excessive liquidity from Japanese, European and U.S. Banks in the 1970s.
 Between the 1970s and1980s, Brazil had an impressive GDP of 8.5%.The per capita
income increased to US $ 2,000 in 1980.
 Several steps were taken by the government to minimize the impact of the crisis of 2008
and 2009,
1. injecting more than U.S. $100 billion of additional liquidity into the economy
2.providing tax cuts to manufacturers and consumers, and reducing Central Bank
interest rates.
 The country has invaluable natural resources, which benefits the economy, especially
with the commodities and bio-fuels markets’ boom.
 Recently, in the Tupi Oil Exploration (Santos Basin), new oil reserves were found,
allowing the Brazilian oil reserves to grow from 13 b.b. to 20 billion b.b..
 The Real Estate sector is one of the most atractive ones in the whole economy, with
growth rates of at least 20% at a national level.
 Recently, Brazil has achieved the Investment Grade classification by S&P and Fitch, and
its currency has beaten a 9 year maximum facing the US Dollar.
• Brazil is the world's tenth largest economy at market exchange rates.
• The country has been expanding its presence in international financial and commodities
markets.
•  The biggest investment boom in history was in 2007 when Brazil launched a four-year
plan to spend $300 billion to modernize its road network, power plants and ports. 
 Brazil
2000 Current

4.3 7.6
GDP Growth Rate (%)

Population Growth 1.4 0.9

Rate(%)

Per Capita Income $2620 $2842

Literacy Rate (%) 88 90

Loopholes
• Brazil received an International Monetary Fund rescue package in mid-2002 in the
amount of $30.4 billion, a record sum at that time. The IMF loan was paid off early by
Brazil's central bank in 2005 (the due date was scheduled for 2006).

• One of the issues the Brazilian central bank is currently dealing with is the excess of
speculative short-term capital inflows to the country in the past few months, which
might explain in part the recent downfall of the U.S. dollar against the real in the period.

• Nonetheless, foreign direct investment (FDI), related to long-term, less speculative

investment in production, is estimated to be $193.8 billion for 2007.
 South Africa
 South Africa is an anomaly among developing countries. It is both a developed country with good
infrastructure and also a country with huge social and economic problem. It has what may be
called a dual economy—one comparable to industrialized nations and another comparable to
developing countries.
 The economy of South Africa is ranked as a upper-middle income economy by the World Bank,
The country was also ranked fourth for ease of accessing capital, fourth for cost of capital, sixth for
its transport infrastructure (considered better than that of China, India, Mexico, Brazil and Poland,
but behind that of Korea and Chile), and seventh for foreign direct investment as a percentage of
GDP.
 It is a productive and industrialized economy that exhibits many characteristics associated with
developing countries, including division of labour between formal and informal sectors, uneven
distribution of wealth and income.
 The formal sector, based on manufacturing, services, mining, and agriculture, is well developed.
 The country has seen modest but steady growth of 3% a year over the past decade.
 South Africa
2000 Current

3.4 4.6
GDP Growth Rate (%)

Population Growth 2.5 1.1

Rate(%)

Per Capita Income $2926 $5684

Literacy Rate (%) 84 88.0

 Loopholes
Unemployment, which is runs at an official rate of 30%, is a
chief concern, especially as it is seen as contributing to the
country's high crime rate.
 High jobless numbers are also the result of the population's
low skill base.
 Thailand
 Thailand's economy started recovering, expanding by 4.2% in 1999 and 4.4% in 2000,
primarily as a result of exports.
 This ongoing transformation of development status has two major characteristics. The
first is Thailand's focus on becoming a development partner with former donor-
countries, as opposed to a recipient of international aid. 
 The second is Thailand's desire to become a donor country itself, assisting in the
development of poorer countries, both within and outside the immediate region
through its "Forward Engagement" foreign policy. 
 The economy of Thailand is an emerging economy which is heavily export-dependent,
with exports accounting for more than two thirds of gross domestic product (GDP).
 Well-developed infrastructure, a free-enterprise economy, and generally pro-
investment policies, made Thailand one of East Asia's best performers. GDP growth by
8.0% in year 2010
 In 1993, the World Bank included Thailand among the East Asian miracle countries.
 The total of female employment rose from six million in 1960 to more than twelve
million today.
 In terms of wages, while the GDP per capita increased fifteen times for the past 40
years, real wages increased over three times.
 Thailand
2000 Current

5.0 2.6
GDP Growth Rate (%)

Population Growth 0.8 0.6

Rate(%)

Per Capita Income $2023 $3760

Literacy Rate (%) 92.6 94.1

 Loopholes
Thailand’s overall economic growth has fallen sharply in
2008 and 2009 as global downturn and persistent political
crisis stalled infrastructure mega-projects, eroded investors
and consumer confidence.
 Another reason is the negligence of agriculture.
There is high decline in production and falling income for
farmers.
Thailand has been witnessing depletion and deterioration of
natural resources.
Forest covers have shrunk from over 40 per cent of land
area in 1960 less than 20 per cent today.
Women and children receive low wages and face poor
working conditions.