3.1.1 Growing economies Flashcards
Explain the growth of Vietnam
Vietnam are one of the fastest growing countries in Asia achieving a GDP growth rate of 7.1% in 2021. Vietnam have seen a recent structural change to their economy in terms of export-led growth as they have started to move in the secondary sector exporting high value manufacturing products such as textiles and electronics.
Explain the growth of SA
South Africa saw a decline in the economy between 2021 and 2022 as GDP growth rate slowed down from 4.7% to 1.9% (Worldbank). SA still significantly specialise in the primary sector and estavlished trade links between vietnam w here they export minerals, metals and other agroculatural products in exchange for vietnams electronics, textiles and foowear. Although with reduced competition in the primary sector as vietnam seeing the structural change, SA may benefit from this. Export led growth is important for SA as is 33.5% of GDP comes from net trade. However have the highest gini coefficient value of 63% in 2021.
Explain the growth of Indian economy.
Since the ww2 economis have beome mor globalised and India have benefited from this. India are advancing in their spcialisation as their share of clothing and textiles decreased from 35% in 1995 to 16% in 2005. Although India’s poor irrigation system, leads to bad harvests and reuction in supply of crops so higher prices affecting levels of consumption. Also have regular power cuts due to the lack of supply of electricity and is estimated $400bn would need to be invested in order for it to meet the standards as the lack of supply of electricity affects transport, healthcare e.t.c
Explain the growth of China
Infrastructure development is a top priority for the Chinese government and it can be argued that the difference in development between China and other developing/emerging countries is due to the focus on infrastructure projects; China invested 9% of their GDP in the 1990’s and 2000s into infrastructure whilst most emergin countries will invest between 2-5% of their GDP.
What are the costs of economic growth on consumers
Due to inequality and wealth divides in countries, when economic growth occurs the wealth divide becomes larger and this seen with countries which have high gini coefficients.
Inequality will further worssen as those who are on fixed low incomes as when economic growth occurs so does inflationary pressur eand low income househoulds will struggle in these times to adjust to new price levels.
What are benefits of economic growth on consumers
On average household incomes rises as more people are in employment and so have a greatee level of disposable income. Consumptions also rises as consumers are more confident as the state of the economy is doing well.
What are the benefits of economic growth on firms?
In times of ecoomic growth, AD is high and consumption is relatively high so profits ar egenerally high too. This will increase capital expenditure and investment due to higher business confidence.
As firms grow due to economic growth they may oprate from economis of scale.
Also with greater export led growth, may make the market more competitive as new frims will enter to try also reap these rewards. The increased competition may force frims to be more cost efficient and operate closer towards the MES.
May decide to undergo rationalisation as a result of econmoic growth too.
What are the two ways employment patterns shift?
When disposable incomes rise as a result of economic growth, causing for financial targets to be met easier and individuals wishing to work less and seek more leisure time or perhaps reitre earlier.
Othe rway is when structural chnage in economy happens and move away from agricultural and less skilled work to more developed work.
What is meant by rationalisation?
When a firm changes and reorganises their operations in order to increase efficiency.
Done by bulk buying and usually in times of economic growth so they can increase their productivity and meet the higher levels of demand whilst still remaining competitive.
