3. Introducing economic development

Question 1

What is Economic Development?

Answer 1

Economic development is the process that seeks to improve the economic well-being and quality of life for a community or in a country as a whole.

(wider measure than economic growth, concerned with standards of living not just incomes)

Question 2

What is a Developing country?

Answer 2

Developing countries are usually categorised as being low per capita income and economic development is usually thought to occur as per capita incomes rise.

Question 3

What is ‘per capita income?’

Answer 3

A country’s per capita income is the best available measure of the value of the goods and services available, per person, to the society per year.

Question 4

What are the difficulties of using ‘per capita income?’

Answer 4

1. Defective statistics due to lack of proper income and spending data collection techniques.
2. Official GDP figures exclude the shadow economy and the value of unpaid work.
3. Inequalities in income and wealth and between different parts of the country. Average (mean) incomes might rise but inequality could grow.
4. Working hours- developing countries may have better work-life balances not obvious in figures.
5. Environmental consideration- Clearing the Amazon rain forest has boosted Brazil’s GDP per capita- have they got a better standard of living?