SA’ADU ZUNGUR UNIVERSITY, BAUCHI
FACULTY OF SOCIAL SCIENCES
DEPARTMENT OF ECONOMICS
COURSE TITLE: COMPARATIVE ECONOMIC SYSTEM
COURSE CODE: ECON 4307
QUESTIONS:
a. Discuss in detail the main characteristics of less developed countries and
developed countries. Choosing any three of those characteristics, explain how
they might reinforce each other to create poverty traps; using a simple diagram
chart to explain the poverty trap.
b. Many contemporary economics may face challenges related to ageing
population, technological disruption and environmental sustainability” compare
how different economic system are equipped to address these challenges using a
specific example from various countries.
GROUP NINE (9) PRESENTATION
S/N NAMES MATRIC NO
1. IDRIS IMRANA BASUG/UG/SSC/ECO/21/3040
2. SUNDAY THOMAS BASUG/UG/SSC/ECO/21/2087
3. ABDULKADIR ALIYU SADIQ BASUG/UG/SSC/ECO/21/3094
4. JOHN QUEEN SUM BASUG/UG/SSC/ECO/21/3111
5. BABAGANA TAHIRAH KK BASUG/UG/SSC/ECO/21/3405
6. MICHAEL LUKKA BASUG/UG/SSC/ECO/22/3591
7. MUHAMMAD ABDULGANIYU BASUG/UG/SSC/ECO/22/4382
8. ABDUL’AZEEZ MOH’D KHALID BASUG/UG/SSC/ECO/22/4639
BAMIDELE
9. BITRUS PAUL BASUG/UG/SSC/ECO/22/4707
10. ELLAH PETER BASUG/UG/SSC/ECO/22/4825
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INTRODUCTION
Developed countries are countries that are being characterized by high standard of
living, advanced industrial activities and infrastructure, and with a highly developed
economy and relatively low poverty rate etc. example of these countries are; USA,
UK, Germany, France, Canada, Japan, China etc.
Less developed countries are countries with low standard of living due to low per
capital income, high population growth and also high unemployment rate, and less
industries to manufacture goods and services.
Examples of less developed economies are: Nigeria, Ethiopia, Kenya, Uganda,
Zimbabwe, Niger, etc.
CHARACTERISTIC OF LESS DEVELOPED COUNTRIES (LDCS)
1. Low Income per capita or G.N.I: - In most less developed countries there is
low per capital in come or gross National Income (GNI). Per capita income is
also known as income per head of an individual in a country, the reason for low
GNI is that in less developed economies the GDP is low due to low productivity
in all the sectors of the economy. There is also low level of technology and
inadequate industries and high level of unemployment etc.
2. Low level of Saving: - In less developed countries the level of saving is very
minimal, this is because of high level of unemployment, low per capita income,
low productivity in all sectors of the economy and low level of education and
skills acquisition. It is certain that savings is a function of income (S=f (Y)), this
is saying that the lower the income, the lower the savings and vice-versa.
3. Low level of investment: - Investment is an act of saving income in a form of
business transactions for future returns on investment or for future profit gains.
Almost all less developed countries have lower rate of investment in all the
capital, the product and the money market. This is so because their level of
savings is low and investment too, is a function of savings (I=f (S)).
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4. Low level of Technology: - In developed economics, there is low technology in
the primary, secondary and tertiary from of production. Using crude implement
in agricultural productivity and also using out dated machineries for production
of goods and service. In some cases instead of using capital intensive means of
production, they use labour intensive.
5. Low Standard of Living: - Poverty is aversive in under developed countries and
large portion of the population struggles to meet basic needs for food, clean
water, sanitation and adequate housing. This lack of essentials undermines health
well-being and future economic potential.
6. Dependence on Agriculture: - Traditional agriculture is often characterized by
low productivity and vulnerable to weather and price fluctuations. It provide
limited income opportunities and makes the overall economy susceptible to
external shocks like droughts or global community rice crashes.
7. Poor Infrastructure: - Lack of reliable roads makes it difficult to transport
goods, limiting market access and raising costs. Insufficient power supply disrupt
businesses and raise production costs. Insufficient communication infrastructure
isolates communities and prevents business from harnessing modern technology
for efficiency.
8. High population Growth: - In most less developed economies, there is high
population growth due to high fertility rate, low per capital income, high
unemployment rate and the people attitude toward having large family size.
9. Limited Education and Skills: - Illiteracy and lack of access to quality
education perpetuate cycle of low skilled-labor. This prevents the ability of
individuals to get better jobs and hinders a country’s ability to move into higher-
value industries. There is also a lack of research and development capacity which
stifles innovations.
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10.High infant mortality Rate: - Mortality rate is the rate at which infant died
during child birth. Per 1,000 in a population in less developed countries, the
mortality rate is high for instance in every 1,000 birth, there is a tendency of 250
children to die during birth. The main reasons is low access to standard maternity,
low level of technology to prevent child dead etc.
11.Low balanced Diet: - in less developed countries such as Nigeria & Ghana etc.
people consume 80-90% of carbohydrate day and knight and because of this
people are not frequently having their 3-square meals every day.
12.Political Instability: - Corruption erodes trust in institutions and discourages
investment. Weak legal system or unpredictable government policies makes it
hard for businesses to plan for the long term.
13.High Unemployment Rate: - In almost all less developed economies, there is
high unemployment rate. This is because there is rapid population growth and
many graduate who are in the labor market searching for jobs always and coupled
with less industries for providing job opportunities.
Examples of less developed countries: Nigeria, Ghana, Ethiopia, Zimbabwe,
Kenya, Bostwana etc.
CHARACTERISTICS OF DEVELOPED COUNTRIES
1. High per Capita Income: - In developed economics there is high per capita
income due to high Gross Domestic Product. Per capita income is calculated by
dividing the total GDP of a country by its total population. Example N45trillion
= 230 million when income per capita is high in a country, people will have high
purchasing power per capita is high income also refers to income per head in a
country.
2. High Level of Saving: - Developed countries have high level of saving. Saving
simply refers to some part of an individual income that is not consume. The level
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of saving is proportional to the level of income that means the higher the income
the higher the level of saving in an economy.
3. High level of Investment: - Investment is an act of spending one’s money in a
business that will give a high return on investment on the money spend on a
particular project or product. Investment is also a function of saving. In developed
economies, there is high level of savings and also a high level of investment
which in turns create job opportunities and consequently an increase in GDP.
4. High level of Technology: - In developed countries, they have high level of
industries with diverse technological advancement in various sectors of the
economy. For example China, USA, UK, Germany, Japan etc have invented
sophisticated weapons of mass destruction, satellites, electronics, machines in
banking sector (ATM), CCTV cameras, aero planes etc.
5. High level of Literacy: - In developed countries there exist a well-developed
educational system. All the standard intuitions of learning ranging from
universities, polytechnics, colleges of educations, school of nursing and
midwifery etc. are found and trains students. Most of these countries have high
percentage of literacy. For example Norway, Japan, UK, USA; their literacy level
is more than 90%.
6. Low Mortality Rate: - Mortality rate simply refers to the total number of child
birth per thousand in a population. In developed countries this is very low which
in some cases it will be one or two children death per 1,000 in a population.
7. Political Stability: - In the developed countries such as USA, UK, France,
Denmark, Norway, Japan, Italy etc have all peaceful political atmosphere without
frequent change in government.
8. High Standard of Living: - In developed countries, the living standard of people
is high, as their are developed medical facilities, high per capital income which
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increases there purchasing power, easy access to loans for business operation etc
and low unemployment rate.
9. Highly Industrialized: - Developed Countries have different industries
including a large service sector contribution. In the USA, the service sector
contribution is 77.3% of its GDP while the industrial sector accounts for 18.6%
in 2019. For Germany, service sector contribute 62.3% while the industrial sector
accounts for 27.1% of its GDP.
10.Developed Infrastructure: - In developed economies, there is highly developed
infrastructural facilities such as un interrupted power supply, good feeder roads,
standard educational institutions, standard medical facilities.
11.Developed Tax system: - Developed countries generally have more developed
tax systems than countries in the less developed economies. There is also a great
variation in the tax rates across developed countries for example, the tax revenge.
In France, is 45.43% of its GDP in 2020, in German is 38.34% and in the USA.
12.Low Population Growth: - In most developed countries they have low or steady
population growth. This is because of high per capital income, low fertility rate,
improved medical services and abortion is legalized. People also have negative
feelings toward having large family size.
13.Life Expectancy: - In the developed world people have longer life expectancy
at birth? For example in France, UK, Germany, Japan etc. life expectancy is
between 85-93yrs before natural death comes. This is because of the high
standard of living coupled with peaceful political atmosphere they have.
14.Human Capital Development Index: - Is the process of increasing knowledge,
ability, skills and overall productivity of the labour force through educational
research and innovations this is high in developed countries.
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Example of developed countries USA, UK, Germany, Franc, Japan, China
etc.
HOW THE CHARACTERISTICS OF DEVELOPED AND LESS
DEVELOPED COUNTRIES REINFORCE TO CREATE POVERTY
TRAP
1. In the developed economies there is high standard of living as a result of high per
capital income; as this increases their purchasing power accompanied by
improved medical facilities and hence high life expectancy.
Where as in the less developed countries like Nigeria, Ghana, Ethopia etc there
is low standard of living due to low per capital income, low industries, high
unemployment rate and inadequate skills to work in the industries.
Therefore, the rich countries continue to be rich and the poor nation strives to
come out of poverty but could not.
2. In the developed economies there is high industries which they producing goods
and providing services of a greater percentage. They have a develop service
sectors that contribute a better percentage to their GDP.
Where as in the developing countries people are engage in the production
of food crops and cash crops. They also produces raw materials goods for
trading with the developed countries. This is because there is few functioning
industries because of low industrialization, insufficient power supply and
inadequate infrastructural facilities. This situation impoverishes the less
developed economies.
3. In the developed countries, there is slow and steady population growth which is
aided by high standard of living, developed medical facilities, high educational
opportunities, people’s mind set toward having few or small family size.
Where as in the less developed economics there is high population growth
due to high fertility rate, low employment opportunity, poor medical attention,
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and political instability and also people are interested in keeping large family
size. In term of labor force, the developed countries use to employ the services
of qualified nurses, Doctors, engineers etc from less developed countries to
work for them. Example such as Canada, UK, Italy, and Indonesia etc. and
there by causing brain drained in the less developed countries. And hence
impoverished the LDCs.
POVERTY: - This is a state of not having the financial resources available to
afford basic needs of food, housing and clothing’s. It is also a situation where one
is unable to provide the basic necessities of life for himself and his family to a
minimum standard.
POVERTY TRAP: - This is a pattern of poverty in an area that does not allow
for those who are impoverished to find a way out of being poor. It can also
referred to as those who are impoverished are unable to escape poverty.
CAUSES OF POVERTY TRAP
1. Low wages/salary
2. Inadequate job opportunities
3. Violence
4. Lack of education
5. Poor sanitation
6. Lack of medical care
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FOUR MAIN TYPES OF POVERTY TRAP
(i) Conflict (ii) Natural Resources (iii) Landlocked country with bad neighbors (iv)
Poor governance of a small country.
Poverty
Low Income Poor Education
Low Productivity Low knowledge & Skills
Poor employment
opportunity
A SIMPLE DIAGRAM CHART OF A POVERTY TRAP
Poverty trap is caused by self-reinforcing mechanisms that cause poverty, once it
exist to persist unless there is outside intervention. Families trapped in the cycle of
poverty have few to no resources. There are many self-reinforcing disadvantage that
make it virtually impossible for individual to break the cycle such as; lack of
financial capital, education and social connections.
- Examples of countries that are practicing capitalist economic system are:
USA, Canada, Germany, UK, Japan, Chile etc
- Examples of countries that are practicing communism as an economic
system are: China, Cuba, Vietnam, Los and North Korea (DPRK)
- Examples of countries practicing mixed economy are: England, France, India,
Nigeria, Sweden, Russia, Iceland etc.
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- Examples of countries that once practice socialist economic system is USSR.
AGEING POPULATION, TECHNOLOGICAL DISRUPTION AND
ENVIRONMENTAL SUSTAINABILITY. HOW DIFFERENT ECONOMIC
SYSTEMS ARE EQUIPPED TO ADDRESS THESE CHALLENGES.
1. Ageing population: - This refers to increase in the number and percentage of
older people age 60 years and above, and at the same time decreasing in number
of fertility rate. An ageing population also refers to a significant increase in the
number of individuals above the age of 60 in comparison to the younger
population.
The challenges face here is; the shortage of man power to work in the industries
and also there will be shortage of research and innovations of new product, and
also they have an uncertain future. In addressing this challenge, developed
countries resort to employ skilled and unskilled labor from various less developed
countries to work in their industries as nurses, Doctors, lecturers, engineers etc.
most capitalist countries such as: USA, UK, Canada etc does that nowadays.
2. Technological Disruption: This refers to the transformation that occurs when
new technologies significantly alter or displace established industries, practices
etc. it also means innovations that significantly alter the way consumers,
industries or businesses operates. The 21st century technological disruption is e-
commerce. The challenges here are: employing skilled and experts in science and
technology. Engaging in an in-depth research and innovations of new method of
production of goods and services.
The address these challenges, the capitalist economists such as the USA, the UK,
Canada etc and some communist countries such as China, Vietnam etc should
employ the services of qualified engineers, scientists and technologist to match
the existing problem of disruption of technologies in the industries.
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3. Environmental Sustainability: - This is the ability to maintain an ecological
balance in our planet natural environment and conserve natural resources to
support the well-being of current and future generation. It is also refers to the
responsibility to conserve natural resources and protect global ecosystem to
support health and wellbeing, now and in the future. In fact, the united state
environmental protection Agency defines it as “meeting today’s needs without
compromising the ability of future generations to meet their needs.
The challenges faced here are: how to maintain an ecological balance in
the presents of large population of people and communities that are constantly
interacting on the natural environment such as lands, forests, water bodies, etc
and to what extends can this maintenance be sustain?
To address this challenge; the capitalists, the feudalist system of economy
should enact a low that will guide the use and misuse of natural environments
such as lands, forest and game reserves. This is so because feudalism deals
with feudal lords who owns the lands, and capitalists are those that engage in
production for a profit motive.
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References
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National Saving in the World Economy.
2. Backer, Gary S. (1971), The Economic Approach to Human Behaviour.
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Economic Development Vol.II.
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poverty.
5. Borro, Robert J. (1990) Government spending in a simple model of Endogenous
Growth, Journal of Political Economy, Vol. 98.
6. Distribution of gross domestic product (GDP) across economic sectors in the
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https//datahelpdeskworldbank.org/knowledgebase/articles.
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