If you would like to know more about the types of cookies we serve and how to change your cookie settings, please read our Cookie Notice. By clicking the "I accept" button, you consent to the use of these cookies. Before you head for the beach, remember this: In Addis Ababa, Ethiopia, starting July 13, world leaders will have a golden opportunity to reshape how they help developing countries grow and prosper.
They must not waste it. The three-day United Nations Conference on Financing for Development is crucial for the poorest nations on the planet. Their already small share of the global aid pie has shrunk by 6 percent since Yet these are the countries where international aid matters the most. Where it is essential to build decent health and education systems and boost investment in agriculture and infrastructure.
But this conference is about more than money. It is no less important for the richer of the poor countries — those approaching middle-income levels. For them, real help would include international reforms to crack down on corruption. You can see the distinct outcomes that different countries need from Addis Ababa by looking at Tanzania and Nigeria.
Both African countries have seen strong economic growth. But they face different challenges in terms of what that growth means — and what type of external assistance is most crucial. The country has vast oil reserves, which account for three-quarters of total government revenues.
Central government revenues are roughly 5 percent of GDP, down from Levels of extreme poverty, for example, have been stuck at 62 percent of the population for the past 20 years. So what does Addis Ababa hold for Nigeria? First, along with other developing countries, it needs to commit at the conference to a new compact with its citizens. Indeed, there are those who argue, rightly or wrongly, that in many countries economic growth is associated with increasing levels of poverty, rather than the reverse.
The relationship between economic growth and poverty is a hotly debated topic, about which people are very divided. Some people highlight the negative effect of growth on low income groups, stressing the need for new approaches to economic development that will allow the poor to benefit more from economic growth than they do at present. Others are more sanguine, believing that the benefits of current models for growth will eventually ' trickle down ' to poorer groups in society, if they are not already doing so.
Most development professionals now believe that growth, at least in poorer countries, is essential but not always sufficient for poverty reduction in the longer term. However, inequality is a potentially important factor in determining how quickly and effectively growth reduces poverty, with growth in countries that start out with high levels of inequality being less effective in reducing poverty than it would be were inequality less pronounced see Ravallion A renewed interest in the role of inequality and efforts to reduce it appears to have entered the development discourse since the global economic crisis of the late s.
Much of the debate in this area revolves around the values and ideals of those engaged in it, as well as the different theories on the subject. It also hinges upon interpretations of the empirical evidence. Poverty and income distribution are hard to measure, especially in developing countries where the capacity to gather and analyse data is often very weak. Consequently, the strength of the statistical relationship between growth, poverty and inequality remains the subject of heated debate.
There is also controversy about the mechanisms by which economic growth may reduce poverty, the timing of these and the policy implications. This has been heightened by the ' bottom billion ' debate see 1.
The bottom billion debate which revolves around the question of whether the poorest people the bottom billion are to be found in the poorest countries see Collier or in fast growing middle income countries see Sumner The policy implications and the politics of tackling poverty depend greatly on which perspective is taken in this debate.
Should, for example, international efforts to reduce poverty be focused on the poorest countries much of sub-Saharan Africa plus various failed states or on reducing poverty in more densely populated parts of the world especially South Asia, but elsewhere too where most of the world's poor now live, but where average incomes in the countries they live in are much higher than in low income countries?
Some would argue that the poor in middle income countries should be the responsibility of the national government concerned and international efforts should be concentrated instead on countries where governments have far fewer resources at their disposal.
Others argue that this is to neglect the plight of the majority of the world's poor people. This problem arises because one US dollar in the United States or Europe, for example, does not buy the same amount of goods and services as it would do in, say, Africa or Asia. For many goods and services one dollar will purchase significantly more in a developing country than it will in a developed one. To overcome this difficulty, economists often use purchasing power parity PPP dollars when making cross-country comparisons of GDP.
These are dollars that are adjusted to account for the differences in purchasing power between different countries. The weaknesses inherent in the use of GDP as a measure of development have led to the creation of other measures. The HDI is a composite index that rates countries according to their overall performance in relation to three criteria. As noted earlier, these are related to fundamental freedoms to live and to participate in society.
UNDP publishes a number of different human development indicators, many of which are composites of other weighted indexes. The main indexes are. Try and find out where your country sits in the HDI rankings. National Geographic. United Nations World Food Programme. World Economic Forum. Nations Online. The Netherlands on the European scale Federal Reserve Bank of St.
Global Health Workforce Alliance. European Commission. Ready, Study Go! Energy Information Administration. Amnesty International. Pen America. InterNations GO! Nations of Change. The Official Site of Sweden. The Economic Times. The New York Times. Office of the United States Trade Representative. Confronting Poverty. Than in Other Countries? Council on Foreign Relations. Emerging Markets. International Markets.
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What Is a Developed Nation? What Is a Developing Country? Key Takeaways Countries may be classified as either developed or developing based on the gross domestic product GDP or gross national income GNI per capita, the level of industrialization, the general standard of living, and the amount of technological infrastructure, among several other potential factors.
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Macroeconomics Major Economies of the Caribbean. Partner Links. Related Terms Developed Economy A developed economy is one with sustained economic growth, security, high per capita income, and advanced technological infrastructure.
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