21) Economic Development Flashcards
Give examples of economic development
⚫️education
⚫️healthcare
⚫️freedom
What does economic development mean
Measuring the quality of life
What is human development programme
⚫️published by united nation development programme
➡️most used measure of development
⚫️composed of three equally weighted index number
➡️health
➡️education
➡️GNI per capita
What is the three component of the HDI
⚫️life expectancy at birth
➡️as an indicator of health
⚫️number of expected years in education
➡️s and indicator of educational standards and human capital
⚫️gross national income per capita
➡️as an indicator of living standards
What are the reason for these key indicators of HDI
There are three key aspects to human development
⚫resources
➡️GNI
⚫️knowledge
➡️of how to make good use of those resources
➡️education
⚫️reasonable life span
➡️to make good use of those resources
➡️health
What are these three key aspects to HDI combined to produce
⚫️index number
➡️ranging from 0-1
➡️higher values
➡️reflecting higher human development
What does the purchasing power parity exchange rate mean
⚫️a way of adjusting exchange rate
➡️to take into account
➡️different cost of living
➡️in different countries
Why is the PPP exchange rate imortant
⚫️difficult to compare national income across different countries ➡️have different currencies ➡️india=rupee ➡️UK=pound sterling ➡️japan=yen
⚫️to make comparison between countries
➡️convert currency into a common currency (US$)
➡️adjusted again
➡️to reflect different purchasing power in each country
➡️e.g. $500 will buy a lot more goods and services in Nigeria than in USA
⚫️therefor HDI will show you
➡️GNI per capita for each country in US$ PPP
What are the advantages of HDI (full)
⚫️easy to collect and reliable
➡️most country have this data
➡️easy to make comparisons between the,
⚫️inclusion of life expectancy and education
➡️ give broader measure of standard of living
➡️than GNI per capita alone
What are the limitation of HDI (full)
⚫️GNI per capita does not give a full indication of distribution in income
➡️country may have high GNI capita
➡️because the rich earn a large share of national income
➡️while most of population is poor
⚫doesn’t give a full picture of quality of life in each country
➡️Syria is high in HDI
➡️due to good education and healthcare
➡️but least desirable place to live in the world
➡️due to ongoing war
⚫️development is very subjective to measure
➡️so broader combination of factors is advisable
Because the quality of life is subjective, what are the other measure of development
⚫️gender related development index
➡️measure of equality between men and women
⚫️% of workforce employed in agriculture
⚫️primary and secondary school enrolment
Why are economic growth rates often lowest in the poorest countries
⚫️debt
⚫️poverty trap
⚫️low income elasticity of demand for the products they produce
Why is debt the reason for low economic growth rates in the poorest country
⚫️many poor country have attempted to increase GDP
➡️by borrowing to invest
➡️often left with high level of debts
➡️interest payments use up resources that can be used on investment and expand
Why is poverty trap the reason for low economic growth rates in the poorest country
⚫️poor workers are unable to save
➡️resources are not saved up to invest and expand
➡️poorest cannot afford education
➡️to improve the skills of their children
Why Is low income elasticity of demand for products they produce the reason for low economic growth rates in the poorest country
⚫️many countries rely on exports of low value agriculture products
➡️but demand for these products are not growing
➡️because as developed countries are getting richer
➡️spend small % of incomes on food
