2.2 Economic Development Flashcards
What is economic development?
Process that results in an improvement in standards of living of a country’s inhabitants
What is the structure of the economy?
Three main sectors:
Primary: production involves the raw materials being extracted, agriculture/ growing of crops
Secondary: production includes manufacturing of goods
Tertiary: provision of services including the quaternary sectors e.g. intellectual property and innovation of new technologies
What is economic development in relation to these three main sectors?
Primary sector production has lower productivity relative to secondary and tertiary sectors= less developed countries rely on primary sector production therefore have lower total factor productivity and can be more vulnerable to volatile commodity prices on international markets
If an economy is more developed it transitions into secondary sector and then becomes more reliable on tertiary which has implications for labour demand and supply, and the risk of occupational immobility
What is the policy objective of sustainable development?
Sustainable development meets the needs of the present without compromising the ability of the future generations to meet their own needs.
The Brundtland Report is the most common report quoted relating to sustainable development
How does economic growth stimulate sustainable development?
Higher GDP/ capita
Improvement in public services- higher taxation used to fund govt expenditure on healthcare and education to improve life expectancy at birth and mean years of schooling
Greener technologies- higher rates of profitability, firms may invest into greener technology which helps reduce the existence of negative externalities
Why does economic growth not guarantee sustainable development?
Environmental capital stock shouldn’t diminish over time- future generations should inherit a stock of resources to enable them to enjoy as high a quality of life as the current generation
Good governance of resources
Income and gender inequalities could still exist
Social factors such as environmental degradation and access to healthcare and education must be considered to boost occupational mobility and increase lifespans
Investment in Infrastructure will aid geographical divides
What is GNI per capita and its usefulness?
Gross National Income per capita
Advantages = World Bank and UN use it as more accurately represents incomes of inhabit between countries
Disadvantages= exchange rate problems differences in currency valuations, informal sector- GNI only includes formal transactions which distorts the data, GNI doesn’t reflect the distribution of income across society, social indicators- number of doctors surgeries/ access to utilities not included, environmental factors- negative externalities, public goods and demerit goods are not included.
What is Human Development Index?
3 components= Resources- GNI per capita, Lifespan, knowledge- schooling
Advantages= tries to include broader range of factors representing social factors rather than just income per head
Disadvantages= only comprises of 3 components missing environmental and social factors
What is GPI and how useful is it?
26 components covering economic, environmental and social factors
Advantage = broader measure than HDI
Disadvantages= assigning an economic value to environmental and social factors can be difficult, distorting the accuracy of the measure
What is gender inequality?
Difference in HDI between genders
Advantages = the UNDP collects HDI data for males and females separately to explore gender inequality
Disadvantages= HDI still only comprises 3 components. Does it look at gender rights, pay gaps and empowerment?
What is Easterlin Paradox?
Measure of happiness
Advantage= Richard Easterlin showed that income and happiness are correlated at a point in time and that happiness doesn’t increase with income over time
Disadvantage is that happiness is a subjective measure and is therefore hard to quantify
What are the main macroeconomic measures and social and cultural indicators
GDP GNI per capita HDI Human Development Index GPI - genuine Progress Indicator Gender Inequality Easterlin Paradox
What are the definitions of each of the social and cultural indicators
GDP Gross Domestic Product
GNI per capita - Gross National income per capita (head)
HDI Human Development Index - Resources: GNI per capita, Lifespan: life expectancy at birth & Knowledge: mean and expected years of schooling
GPI - genuine Progress Indicator - 26 components covering economic social and environmental factors
Gender Inequality - difference in HDI between genders
Easterlin Paradox - measure of happinness
Name a advantage and disadvantage of each ?
GDP - ADV - simple measure that is objective DISADV - a very limited statistic as only looks at income of a country
GNI per capita ADV World Bank and UN use it DISADV exchange rate problems, social indicators such as no of doctor surgeries not included
HDI Human Development Index ADV - attempst to include a broader range of factors DISADV only comprises 3 components - it misses ENV and SOCIAL factors
GPI - genuine Progress Indicator ADV a broader measure than HDI DISADV - assigning an economic value to env and social factors can be difficult and can distort the measure
Gender Inequality ADV the UNDP collects this data DISADV another measure of gender inequality might look at gender rights, pay gaps and empowerment
Easterlin Paradox ADV - Easterlin showed there is a correlation between income and happiness DISADV - happiness is a subjective measure
