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Geographic and Demographic Differences

Countries have geographic differences: some have extensive coastlines, some are landlocked. Some have large rivers that have been a path of commerce for centuries, or mountains that have been a barrier to trade. Some have deserts, some have rain forests. These differences create different positive and negative opportunities for commerce, health, and the environment.

Countries also have considerable differences in the age distribution of the population. Many high-income nations are approaching a situation by 2020 or so in which the elderly will form a much larger share of the population. Most low-income countries still have a higher proportion of youth and young adults, but by about 2050, the elderly populations in these low-income countries are expected to boom as well. These demographic changes will have considerable impact on the standard of living of the young and the old.

Differences in Industry Structure and Economic Institutions

Countries have differences in industry structure. In the high-income economies of the world, only about 2% of GDP comes from agriculture; the average for the rest of the world is 12%. Countries have strong differences in degree of urbanization.

Countries also have strong differences in economic institutions: some nations have economies that are extremely market-oriented, while other nations have command economies. Some nations are open to international trade, while others use tariffs and import quotas to limit the impact of trade. Some nations are torn by long-standing armed conflicts; other nations are largely at peace. There are differences in political, religious, and social institutions as well.

No nation intentionally aims for a low standard of living, high rates of unemployment and inflation, or an unsustainable trade imbalance. However, nations will differ in their priorities and in the situations in which they find themselves, and so their policy choices can reasonably vary, too. The next modules will discuss how nations around the world, from high income to low income, approach the four macroeconomic goals of economic growth, low unemployment, low inflation, and a sustainable balance of trade.

Key concepts and summary

Macroeconomic policy goals for most countries strive toward low levels of unemployment and inflation, as well as stable trade balances. Countries are analyzed based on their GDP per person and ranked as low-, middle-, and high-income countries. Low-income are those earning less than $1,025 (less than 1%) of global income. They currently have 18.5% of the world population. Middle-income countries are those with per capital income of $1,025–$12,475 (31.1% of global income). They have 69.5% of world population. High-income countries are those with per capita income greater than $12,475 (68.3% of global income). They have 12% of the world’s population. Regional comparisons tend to be inaccurate because even countries within those regions tend to differ from each other.


Retrieve the following data from The World Bank database (http://databank.worldbank.org/data/home.aspx) for India, Spain, and South Africa for the most recent year available:

  • GDP in constant international dollars or PPP
  • Population
  • GDP per person in constant international dollars
  • Mortality rate, infant (per 1,000 live births)
  • Health expenditure per capita (current U.S. dollars)
  • Life expectancy at birth, total (years)
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Prepare a chart that compares India, Spain, and South Africa based on the data you find. Describe the key differences between the countries. Rank these as high-, medium-, and low-income countries, explain what is surprising or expected about this data.

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International Labour Organization. “Global Employment Trends for Youth 2013.” http://www.ilo.org/global/research/global-reports/global-employment-trends/youth/2013/lang--en/index.htm

International Monetary Fund. “World Economic and Financial Surveys: World Economic Outlook—Transitions and Tensions.” Last modified October 2013. http://www.imf.org/external/pubs/ft/weo/2013/02/pdf/text.pdf.

Nobelprize.org. “The Prize in Economics 1987 - Press Release.” Nobel Media AB 2013 . Last modified October 21, 1987. http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1987/press.html.

Redvers, Louise. BBC News Business. “Youth unemployment: The big question and South Africa.” Last modified October 31, 2012. http://www.bbc.co.uk/news/business-20125053.

The World Bank. “The Complete World Development Report Online.” http://www.wdronline.worldbank.org/.

The World Bank. “World DataBank.” http://databank.worldbank.org/data/home.aspx.

Todaro, Michael P., and Stephen C Smith. Economic Development (11 th Edition) . Boston, MA: Addison-Wesley: Pearson, 2011, chap. 1–2.

Questions & Answers

what are the side effects of government policies
narayan Reply
Government policy can influence interest rates, a rise in which increases the cost of borrowing in the business community. Higher rates also lead to decreased consumer spending. Lower interest rates attract investment as businesses increase production.
if there is a negative technology shock to the economy in short run the firms production cost will go up and labor goes down and thus consumption and production will be lower than before. the government can spend to create jobs and central Bank can lower the interest rates
what are marlet prices
Jaheim Reply
price which includes net indirect taxes
what is aggregate demand
Kalkidan Reply
what is micro economics
A-dip Reply
microscopic study...
microeconomics is study of individual, household and firms of division making and allocation of resources.
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what a pure economics. must have downloaded by mistake.
microeconomics is the study of an individual unit in an economic system or an household
what really cause inflation?
Urey Reply
what is trade deficit
vivek Reply
is ther forgon alternative. is the amount sacrifice of one thing to gain another thing
what is enflation rate?
Mohibullah Reply
Is it inflation rate sir
This is the annual rate of increase of basic household goods and services and measures also the cost of living and doing business in a country. it's a important information when making for forecast or business plans.
this is continuous increase of overall price level
the betewen microeconomics and macroeconomics is microeconomics is concerned with individual scarcity like household,workers and so on while macroeconomics is focuced on the problème winth organisation the collaboration with others companies the profits and then the growth of the organisation
Amadou Reply
what is tax base
ekwuye Reply
The tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority.
what is economic system
Alinda Reply
Quantity of Gasoline in millions was?
Touseef Reply
1000cubic meter
definition of phillips curve
Alok Reply
what is closed economy
Nati Reply
an economy that is not open
meaning: The economy is a closed system, there is not trade between this economy and another one, so no shared market. just a system with no outside influences.
what are the decision-making unit of an economy..?
an economy which is not involved in exchange with foreign countries
what is the demand curve
Cabdiqani Reply
it is the graph of aggregate demand in a market
the demand curve is a graph showing the quantity demand and price and the numbers and numbers of units at various quantity demanded
' it is a diagram with two axes one represent price, the other represents quantity demanded. the curve slops downwords from left to right interpreting the Law of demand (reversed proportion between price and demand ) The higher the price the lower the demand..
What is DMU and how affects demand?
what is the correlation between poverty inequality and crime
What is economic growth
An increase in the production of goods and services.
economic growth is the quantative approach , in which the GDP of nation is increase..
poverty and inequality is a direct result of the unequal distribution of wealth. Crime is directly related to poverty and inequality, if a minority of a population control the resources and wealth of a nation, the majority will tend to illegal activities to gain resources to sustain their demand.
what is enflation rate?

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Source:  OpenStax, Macroeconomics. OpenStax CNX. Jun 16, 2014 Download for free at http://legacy.cnx.org/content/col11626/1.10
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