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What is a Developing Country
When addressing global poverty, a term that people often reference is “developing country.” But what is a developing country? In general, developing countries are typically battling poverty, but there is a lot more to these countries. A broad definition for this referred term would be a country seeking to advance its economic performance amongst other global economies. A more specific description for developing countries is complex to derive since various factors and indicators apply when examining world economies. Plus, the world does not have universal interpretations of these aspects.

What the Numbers Say

A useful indicator to help identify what is a developing country would be the gross domestic product (GDP) of purchasing power parity (PPP) per capita. This numerical value entails all the goods and services produced in a country within one year, standardized to U.S. prices, then divided out amongst its population. In other words, GDP PPP per capita describes the average economic wealth of each individual in a state. Thus, this establishes thresholds to determine a developing country. According to Investopedia, “As a rule of thumb, countries with developed economies have GDP per capita of at least $12,000(USD), although some economists believe that $25,000 (USD) is a more realistic measurement threshold.”

GDP PPP per capita can give a quick snapshot of the modern world economy by classifying developing countries as a value of less than 25,000 USD. It is a more relevant index than other economic comparing tools, such as nominal/real GDP, which does not account for consumer price variants among regions or the population of a country. Without considering the population, skewed data emerges within the actuality of global economies. For example, this article will compare China and Switzerland.

China has a GDP PPP of $23.21 trillion USD and Switzerland only $523.1 billion USD. Looking at these two numbers alone, it seems as though China is leaps and bounds more wealthy than Switzerland, but China’s population is more than 16 times Switzerland’s. Observing GDP PPP per capita, China values at $16,700 USD and Switzerland $62,100 USD. These numbers show that the average person in Switzerland is $45,400 USD more wealthy than those in China. In conclusion, the developing country is China, while the developed one is Switzerland. GDP PPP per capita is an economic calculation that can help answer the question, what is a developing country?

Human Development Index

There is more to consider than financial measurements when classifying what is a developing country. Just because a country exceeds the $25,000 USD threshold does not necessarily define it as developed. Another helpful indicator is the Human Development Index (HDI), a metric that the United Nations (UN) developed. The UN defines the index as “a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and have a decent standard of living.”

A scale from zero to one defines the numerical values of the three components, then the geometric mean of those numbers is composited. “The health dimension is assessed by life expectancy at birth, the education dimension is measured by means of years of schooling for adults aged 25 years and more and expected years of schooling for children of school entering age. The standard of living dimension is measured by gross national income per capita.” If the result of the calculations equal to 0.8 or higher then HDI standards considers the state developed.

Using the previous example countries, China and Switzerland, the HDI is 0.758 and 0.946, respectively. This ratio supports an identical conclusion in regard to categorizing states. China again falls into the developing spectrum.

Critics

GDP PPP per capita and HDI have limitations in determining what is a developing country. While GDP PPP per capita measures wealth and HDI quantifies basic achievement levels in human development, neither account for other quality of life factors such as empowerment movements or security. Also, some economists believe HDI has too high of a correlation with GDP PPP per capita that it is not necessary due to redundant results.

BRICS

The top five developing countries today are Brazil, Russia, India, China and South Africa (BRICs). Why are these five important countries to note? Predictions show they will be future dominant suppliers of manufactured goods, services and raw materials. Accreditation for the growth within these regions goes to low labor and production costs. The BRICS countries currently fall into GDP PPP per capita and HDI developing country thresholds and are seeking to advance their economic performance among the global economies.

Ariana Kiessling
Photo: Flickr

Poorest Countries in the World
The poorest countries in the world are places where the GDP per capita (meaning GDP divided by the number of people in a country) is the lowest. GDP per capita is a better measure than GDP, because GDP does not account for each individual in a country; rather, GDP accounts for a country as a whole. GDP per capita creates a better image of what each individual in a given country is worth.

There are three reputable institutions that measure GDP per capita: The International Monetary Fund, The Central Intelligence Agency and The World Bank. The conclusions these organizations find are similar. A deviation that exists is which one takes Purchasing Power Parity (PPP) into account, as this is a measure of GDP per capita that takes costs of living and inflation rates into consideration.

The CIA list is going to be the most accurate, as it includes the highest number of known countries out of the three, whilst taking into consideration GDP per capita influenced by PPP. All of the estimates of GDP per capita influenced by PPP are as of 2017.

10: South Sudan (GDP Per Capita + PPP = $1500)

Since the creation of South Sudan, a Central-Eastern landlocked country,  in 2011, its GDP per capita has been on a non-linear decline. What largely accounts for this trend is an ongoing civil war which started in 2013.

As a result of this civil war, millions have been declared displaced and as refugees, and famine has ravished several parts of the country. Also, on top of this, both sides of the civil war have both committed a wide range of human rights violations on the citizens of South Sudan.

The conditions of civil war set the stage for poverty. Eighty percent of people living in Sudan are defined as “income poor” and live on less than $1 a day. Eighty-five percent of the population is engaged in non-wage work and one third of the population does not have access to a secure amount of food.

9: Eritrea (GDP Per Capita + PPP = $1400)

Eritrea is a very small country in Africa. Despite being the 9th poorest country in the world, the nation has made vast improvements. GDP per capita in 1992 was under $800, and is now $1400. This is still a staggeringly low GDP per capita for a country that has a population of a little over 5 million people.

The cause of such severe poverty is multifaceted. Environmentally, Eritrea has always faced droughts, and with 80 percent of the population engaged in subsistence agriculture, this makes for very low productivity of food for 80 percent of the people living in Eritrea. There is also a general lack of financial resources in Eritrea, thus leading to a lack of large private enterprises and a very low industrial production growth rate of 5.4 percent.

The government of Eritrea is very unhelpful here, too, as they have been preoccupied with military spending and attempting to figure out how to obtain a coherent policy of a national hard currency.  

8: Mozambique (GDP Per Capita + PPP = $1,250)

The South-Eastern African Country Mozambique has always had a low GDP per capita. Even when it gained independence in 1975, the nation was considered one of the world’s poorest countries. Since its independence, socialist policies and general economic mismanagement have further impoverished the country. Nearly 50 percent of Mozambique’s population lives in poverty.

This has been exacerbated by lack of effort and results in poverty reduction, and slow economic growth of which does not benefit all Mozambique citizens equally, keeping the poor, poor. Potential for improvement in Mozambique is in agriculture, as most of Mozambique’s population works in this field. Also, innovations in tech and other lacking inputs would greatly benefit these workers.

7: Niger (GDP Per Capita + PPP = $1,200)

Forty percent of what constitutes Niger’s GDP is agriculture. Agriculture also provides 80 percent of Niger’s population livelihood. Like all of the countries on this list, Niger’s poverty is accounted for by various factors: increase in population, lack of food security and low levels of educational quality.

Another large sector of Niger’s economy is uranium. This sector has been interrupted in recent years by terrorist activity that has also increased Niger’s government expenditure on security. These issues increased Niger’s reliance on foreign aid as a result.

It is also the case that families in Niger are large (6 per household on average), so what constitutes 80 percent of the livelihood of Niger across generations must be distributed between more and more people. The GDP per capita in Niger is on the rise, but ongoing conflict and rapid population growth makes the economic situation in Niger a difficult hurdle to overcome.

6: Malawi (GDP Per Capita + PPP = $1,168)

Malawi is a landlocked African country that depends heavily on external donors for subpar economic stability. In fact, GDP per capita growth has decreased in Malawi since 1961. Given that Malawi’s domestic economy is dependent upon primarily rain-requiring agricultural, and the geography of Malawi is prone to droughts this makes sense.

Climate change and growing population rates threaten to exacerbate this problem which has caused an increase in food shortages in recent years. However, government corruption is incredibly common in Malawi, which has very frequently led donors to withdraw funds. Amidst the turmoil, child and maternal health have made large strides in improvement. This is due to increases in prenatal care, vaccinations and skilled birth assistance.

5: Somalia (GDP Per Capita + PPP = Unknown)

Somalia is in the middle of this list because the data on their economy is very vague. The GDP per capita is $500 without PPP according to the World Bank. What is known about Somalia is that there is a perverse lack of educational opportunities (less than half of Somali children are in school) and job opportunities (paired with strict-conservative religious influence in Somali culture inclines younger people to turn to extremist groups).

With a rapidly growing population, improvements in recent years are mainly in infrastructure — something which Somalia lacked prior to the 1991 collapse of central authority. Such improvements are peculiar to Mogadishu, Somalia’s capital, an indication that rural areas are still in need of improvement.

4: Liberia (GDP Per Capita + PPP = $900)

A large role in how Liberia became such a poor country has been civil war and economic mismanagement by the Liberian government. Post-civil war Liberia (2010-13) seemed to be making an economic comeback, until the 2014 Ebola outbreak which put Liberia back several years. Export prices have yet to return to pre-ebola levels.

Liberia suffers from one of the world’s worst maternal mortality rates (7th in the world) and female death rates are amongst the highest in the world due to a high frequency of female genital mutilation (this effects two-thirds of Liberian women/girls.) According to CIA data, “Significant progress has been made in preventing child deaths, despite a lack of health care workers and infrastructure. Infant and child mortality have dropped nearly 70 percent since 1990; the annual reduction rate of about 5.4 percent is the highest in Africa.”  

3: Democratic Republic of The Congo (GDP Per Capita + PPP = $800)

The Congo’s ongoing conflict makes ongoing economic instability inevitable. Such conflict has decreased output, increased conflict expenditure, increased external debt and has left the inhabitants of the Congo in very poor conditions. Such conditions include chronic food/resource mismanagement, chronic malnourishment, low rates of vaccinations, low availability of adequate drinking water, and very low quality public services (education, police etc.).

It is difficult to measure how improvements are occuring due to obscure data which is accounted for the majority of the DPC’s economy occurring outside of formal/traditional economic sectors (black markets).

2: Burundi (GDP Per Capita + PPP = $770)

In the past 27 years, the GDP per capita in Burundi has changed very little. Burundi, a landlocked African nation, has very little in terms of quality natural resources and manufacturing. Ninety percent of its population is in agriculture, which makes up 40 percent of its GDP.  

Almost half of Burundi’s income is derived from foreign aid and the majority of the rest is dependent upon coffee and tea exports. Production of these goods relies on weather and global coffee and tea prices, which are not constant variables.

Burundi suffers from massive food shortages and lack of clean water, which has resulted in a 60 percent child malnutrition rate. The government has established Vision 2025 in cooperation with the United Nations Development Programme and the African Future Institute as it seeks to reduce poverty to 33 percent by 2025.

1: Central African Republic (GDP Per Capita + PPP =$700)

Conflict has caused international donors to withdraw financial support of the Central African Republic (CAR). Ongoing humanitarian crises have created “CAR’s high mortality rate and low life expectancy, elevated rates of preventable and treatable diseases (including malaria and malnutrition), an inadequate health care system, precarious food security, and armed conflict.”

Schools are closed. There is also an ongoing refugee crisis inside and out (mostly to Chad) due to the ongoing conflict which started in the 2012 coup. CAR has one of the most unequal wealth distributions in the world on top of a lacking economy. This is due to various geographical and agricultural reasons, poor economic management, an unskilled workforc  and a poor transportation system that hinders trade.

Aid For The Poorest Countries in the World

Some of the conflict is also over “blood” diamonds. Efforts are being made to make said diamonds no longer of value, by lifting bans on their exports, as a means to reduce conflict and ultimately reduce poverty, by increasing government revenue.

It is clear that all of the poorest countries in the world list are in dire need of help, especially from the international community. Budget cuts threaten current national levels of foreign aid, and this is why supporting efforts like The Borgen Project is important. This organization amongst others actively opposes such budget cuts by calling, emailing and lobbying congress to oppose them. With support like this, powerful change can happen in the ten poorest countries in the world.

– Daniel Lehewych
Photo: Flickr

Why Is Gabon PoorWhy is Gabon poor? This is a question that is, unfortunately, stereotypically asked about any African country. This is particularly the case with Gabon, due to the fact it is not historically one of Africa’s most developed nations.

What is even more unfortunate is that Gabon fits this stereotype very well, as it is one of the poorer countries in the world. According to the World Bank, the country’s poverty headcount was 32.7 percent as of 2005.

This is interesting because, on a larger international scale, Gabon’s economy is doing relatively well. According to the CIA World Factbook, Gabon’s GDP growth has been significant over the last few years, with 4.4 percent growth in 2014, 3.9 percent in 2015 and 2.3 percent in 2016. While there has been a decreasing trend in these figures, they are still substantial. Gabon’s GDP per capita is worth noting, too. Listed at $19,100 as of 2016, the country is ranked 88th in the world.

So, if Gabon’s economy is doing reasonably well on the international stage, why is Gabon poor? The answer, it turns out, is centered around income inequality.

While Gabon’s national income has greatly benefitted from oil exports, its workforce has not seen these returns. As recently as 2015, Gabon’s unemployment rate was 28 percent, one of the highest in the world.

This means that, simultaneously, Gabon’s national income has been rising quickly while almost a third of its workforce remains unemployed and therefore unable to reap those benefits. The result is rising inequality that has devastated the country. As of 2005, the lowest 10 percent of Gabon’s population held only 2.5 percent of household income, while the highest 10 percent held 15 times that amount at 32.7 percent of household income.

Gabon has thus been left in an awful situation. With a third of its population unemployed and a third of its national income going to the top 10 percent of its population, very little funds are left over to bring the country’s poor out of poverty and into the workforce. As these figures worsen, the hole Gabon has dug continues to get deeper.

If Gabon wants its economic growth to be sustainable, the country must improve its fiscal management. By allocating more of its national income to the poor and by prioritizing job growth to lower its unemployment rate, Gabon could see real gains that last beyond the short term and set the country up as one of the region’s major economies.

So, why is Gabon poor? Systematic inequality has ravaged the country, but there is opportunity for change. As the country industrializes and continues to see economic gains, the international community must continue to observe the country’s financial management.

John Mirandette

Photo: Flickr