14.1 National development Flashcards
what are the 4 different employment sectors?
- primary: produces raw materials from land/sea. e.g farming, fishing, mining
- secondary: manufacturing e.g car production (goods are either capital or consumer)
- tertiary: services to businesses and to people, e.g teachers, nursers, retail workers
- quaternary: information and expertise using high technology, research and development important. e.g aerospace engineers, research scientists
how have employment structures changed over time?
- following industrialisation, large reduction in employment in the primary sector due to the mechanisation of farming, mining, forestry etc drastically reducing demand in these industries and so jobs disappear
- force people to move to urban areas where secondary/tertiary jobs expanding: less than 4% employed in primary sector compared to 40% in 1900
- manufacturing jobs also replaced by factories/machinery and many of the jobs now done in LICs
- tertiary sector also changing though as e.g banking computer networks reduced need for people
- service industry rising, e.g health/tourism as disposable incomes rise and so more holidays
employment structure in LICs
LICs:
- heavily-dependent on primary sector where most work as subsistence farmers
- densely populated areas not enough work and often shared = underemployed
- some regions of LICs mining, fishing or forestry dominate and although mining is often better paid than other jobs, the working conditions are harsh
- primary product dependency means very high unemployment if changes in world market - very vulnerable
- tertiary jobs available often in public sector e.g teaching so paid by the gov and so limited as low on funds and salaries not paid on time
employment structure in MICs
- employment in manufacturing increased rapidly in recent decades due to FDI from TNCs contributing to development
- other contributions to development e.g through service industry e.g in India
- increasing wealth = mechanisation = fall in demand for labour in primary sector
employment structure in HICs
- post-industrial
- most in teritary with increasing number in quaternary
- fall in secondary:
- manufacturing industries moved for lower costs in MICs/LICs
- investment in tech replaced human labour
- outsourcing to save money where lower labour costs e.g British companies (BT) have outsourced their call centres in India
- increase in WFH (especially in COVID) however some companies urging workers back to office as more productive
role of primary sector in economic development
- provision of raw materials: needed for manufacturing and so development of secondary and tertiary sector
- providing employment: enables workers to gain income and so spend in the economy helping to boost growth and development through the multiplier effect and also increases tax revenue allowing more infrastructure development
- attracts investors/TNCs for extraction of natural resources, e.g oil (UAE)
role of secondary sector in economic development
- importance in industrialisation: leads to higher GDP and so economic development
- job creation/employment in manufacturing: as industries expand also create indirect employment in sectors such as retail, transport
- adding value to raw materials: through manufacturing leads to increase in wealth in the economy
- development of secondary sector makes economy less vulnerable to external risks, e.g price fluctuations
- boost trade of secondary goods = economic development
role of tertiary sector in economic development
- contribution to GDP/economic growth: largest contributor in developed economies through finance, technology, retail
- large employer: main source in many countries: healthcare, education etc, also as service sector grows often provides higher educated jobs improving skill development/income levels
- important in function of other sectors e.g secondary as provides financial services and logistics
role of quaternary sector in economic development
- R&D: drives innovation and improves productivity boosting growth as well as improving quality/competitiveness of products: important for trade
- job creation in high skill and high paid roles: contribution to GDP and higher standards of living
- can enhance productivity in other sectors
- attracting foreign investment who seek locations with well-educated workforce and high level tech, in turn help to boost growth/competitiveness
- long term: help sustainable economic development through new technologies, e.g renewable energy
causes of global inequalities in social and economic wellbeing
-
historical factors
- colonialism: legacy of exploitation, extraction of resources and slave trade
- industrial revolution: gap between industrialised e.g UK and less industrialised parts of the world -
physical factors:
- climate: natural disasters impact social and economic wellbeing
- resource endowment: lead to export-led growth but also primary product dependency and so lower levels of social/economic wellbeing
- landlocked regions face difficulties of sea borne trade: lower trade = lower income = lower economic wellbeing -
human factors:
- urbanisation: may improve economic wellbeing through investment, higher wages etc and so create divide between rural vs urban areas especially if high migration, however social wellbeing may be higher in rural areas: rural idyll, community spirit -
political factors:
- government corruption = unequal distribution of wealth/resources
- conflict can lead to destruction of infrastructure/displacement of people = lower economic/social wellbeing -
development levels;
- high development = improved healthcare, access to education, infrastructure which all = higher social/economic wellbeing
distribution of global inequalities in economic and social wellbeing
- developed vs developing countries:
- HICs higher than LICs - Urban vs Rural areas: people in urban areas 3x wealthier (but cost of living higher)
- Global North vs South
- Regional North vs South (UK)
W.W Rostow and the stages of economic growth
- created in 1960
= 5 stages countries must pass to become developed
1. traditional society: subsistent, agricultural-based economy
2. Pre-conditions to take-off: begins to develop manufacturing and more national/international outlook (rather than regional)
3. Take-off: short period of intensive growth, industrialisation
4. Drive to maturity: over long period of time, living standards rise, use of tech increases and economy grows
5. Age of high mass consumption: most western countries: economy flourishes in a capitalist system: mass production and consumerism
criticisms of rostow’s model
- bias towards the western model as only path towards development
- lays out five steps towards development but all countries do not develop in such a linear fashion
- top-down /trickle-down development route: other models challenged it emphasising a bottom up development route, where country becomes self-sufficient through local efforts not urban industry
- model disregards site and situation
dependency theory
- 1971 AG Frank
- argues developing nations have failed to develop because West has systematically underdeveloped them, keeping them in a state of dependency - neo-colonialism
- reason for global inequalities, but not necessarily applicable today as lot of industrial centres now in MICs not HICs
single economic measures of development
GDP
GNP/GNI
GNI pci
GNI pci (PPP)
Gini
advantages/limitations of using GDP to measure inequality
Advantages:
- to some extent reflects living standards: often correlation between higher GDP and higher living standards which can reduce inequality
- help identify economic growth/decline: growth may help reduce inequality if policies well-designed (but may also increase it)
- internationally recognisable and so easily comparable
Limitations:
- merely measures the size of nation’s economy, doesn’t reflect welfare
- exclusions of non-market transactions, e.g subsistence agriculture, barter
- home produced goods e.g allotment grown food, childcare by family not included
- informal sector not captured
- failure to account for/represent the degree of income inequality in society: even though GDP per capita measures average it does not reflect distribution
- statistical errors: due to millions of calculation/surveys needed they are likely
- failure to indicate whether nations rate of growth is sustainable or not
- inability to capture illegal activity: hidden economy
- failure to account for costs/negative externalities arising from production/consumption
- public sector: hard to measure as not bought/sold, e.g schools
- quality issues: if technological advances mean falling prices this will reduce GDP due to value even though consumers better off
why is GNI pci PPP best measure?
- addresses national not domestic so better applies to an increasingly globalised world
- per person so appreciates that China and HK total GDP cannot be compared due to population size
- PPP so takes into account purchasing power - Big mac Index $50 buys 30 in India, 7 in Switzerland
- but still most of issues above apply to, if add Gini co-efficient this can help to address issues of inequality
key single social measures
Life expectancy
Infant mortality
Literacy rate
key single economic measures
GDP
GNI
GNI pci
GNI pci (PPP)
Gini
key composite measures
PQLI
HDI
IDHI
GDI
what is the best measure for social development/inequality?
-
Life expectancy:
- number of years a new born infant can be expected to live
Adv: simple, reflects public health, widely available
Dis: ignores quality of live, no inequality reflected, limited scope (just one aspect of dev) -
Infant Mortality rate:
- number of infants dying before reaching one year of age, per 1,000 live births in a given year.
Adv: reflects healthcare quality, simple/clear, indicator of socioeconomic conditions (poverty, sanitation and nutrition)
Dis: limited scope(no quality of life), no inequality, sensitive data issues (less accurate?) -
Literacy rate:
- Percentage of 15+ who can read and write
Adv: indicates education access, simple/clear, links to econ dev
Dis: ignores quality/depth of education, excludes other important skills, no inequality -
Education - gross enrolment ratio:
- total enrolment in tertiary education, expressed as % of total population of five year age group following on from secondary school
Adv: reflects access to education, highlights commitment to expanding education
Dis: ignores quality, misleading (not actual participation), excludes drop out rates
Life expectancy as reflects healthcare quality, nutrition and living standards and strongly correlated with education and captures long-term impact of disease, conflict and poverty, so can compare inequalities in development levels
not the others as literacy rate doesn’t capture health and infant mortality focuses on early life stages
what is the best single measure for economic inequality?
-
GDP:
- total value of all goods and services produced within a country
Adv: international comparisons, reflects economic growth - suggest rise in living standards?
Dis: ignores inequality, excludes non-market activity (unpaid/informal), no consider environmental/sustainability issues, limited scope -
GNI:total market value of all goods and services produced by a country’s residents + income from abroad
Adv: includes foreign income (global activity), broader measure
Dis: ignores inequality, excludes non-market activities, environmental impact, potentially misleading -
GNI pci:
- divided by total population
Adv: adjusts for population size - easier to compare, insight into average income level/standard of living
Dis: ignores inequality (high values distort average) = potentially misleading -
GNI pci (PPP):
- accounts for different cost of living
Adv: accurate cost comparison and better comparison of standards of living, adjusts for exchange rate volatility - reducing distortions
Dis: issues of data availability, excludes non-comparable goods, complex -
Gini:
- a measure of income inequality within a country, ranging from 0 to 1
Adv: simple/clear, widely used and represent overall inequality
Dis: ignores context (no why), doesn’t reflect absolute poverty or income levels
best for development is GNI pci (PPP) as combines benefits of all, however still issue of inequality, Gini best for just inequality
what are the composite measures for social/economic development and which is best for measuring inequality?
-
PQLI: physical quality of life index:
- life expectancy, infant mortality rate and basic literacy rate
Adv: quality of life rather than just economic, broad (beyond income), highlights development gaps - areas need improving, e.g healthcare
Dis: limited indicators, no income measure (crucial for quality of life), ignores inequality in the actual measure, basic indicators -
HDI:
- life expectancy at birth, mean years of schooling, expected years of schooling and GNI per capita
Adv: comprehensive measurement, global comparisons, several aspects - social/economic
Dis: ignores inequality, no environmental factors, cultural bias (western view), uses averages, -
IHDI:
- life expectancy at birth (adjusted for inequality), mean years of schooling, expected years of schooling and GNI per capita
Adv: inequality accounted, shows disparities
Dis: complex to calculate, factors still limited, doesn’t capture all inequality as misses broader societal inequalities -
HPI: happy planet index
- life expectancy, well-being, ecological footprint
Adv: wellbeing and sustainability
Dis: subjective, limited indicators, over simplification?, misleading if disguises other underlying issues - inequality
IHDI best as measures development well using both social/economic factors so can be used to compare global inequality, but also accounts for smaller scale inequality within the measure
GDI
- gender development index
- female and male life expectancy at birth, female and male expected years of schooling for children, female and male mean years of schooling for adults ages 25 years and older; and command over economic resources, measured by female and male estimated earned income
