4.1 Understanding Economic Development Flashcards
What is economic growth?
Increases in output and incomes over time
What is economic development?
A process that leads to improved standards of living for a population as a whole.
What was ‘trickle-down’ theory?
The theory that believed that the benefits of growth would eventually trickle down to everyone.
What are the three core values of human development?
- Life Sustenance: Access to basic services such as education, healthcare, food, clean water, clothing and shelter.
- Self-esteem: The feeling of self-respect, dignity and honour - linked to the absence of exploitation.
- Freedom: Ability to choose and act in a way that you wouldn’t be able to in poverty.
What sources of growth are particularly important in developing countries?
(4)
- Increases in the quantity of physical capital
- Increases in the quantity of human capital
- Development and acquiring new appropriate technologies
- Institutional changes
Why is it easier for a resource-poor country to develop rather than a resource-rich country?
Resource-poor countries are unable to depend on their natural capital so seek to industrialise and to improve human capital.
Whereas, despite resource-rich countries being able to sell lots of their resources to pay for development, in doing so they become dependant on resources.
How could you represent economic growth and development on PPC curves?
PPC of industrial goods vs merit goods.
Expanding out = economic growth
Moving to a position with more merit goods = economic development
How can you distinguish between economically more developed and less developed countries?
By using GNI per capita, the World Bank divides countries into 4 groups.
What income groups are linked with economically less developed countries?
- Low income
- Lower-middle income
- Upper-middle income
(GNI per capita
What income groups are linked with economically more developed countries?
- High income ($11,906=< GNI per capita)
What are common characteristics of developing countries?
- Low levels of GDP/GNI per capita
- High levels of poverty
- Relatively large agricultural sector
- Large urban informal sector
Why are high birth rates a problem in developing countries?
- Rapid population growth requires rapid output and income growth for GNI per capita to increase
- Rapid population growth causes a high dependency burden on families and/or government
- Negative consequences on birthing mothers
- Rapid population growth contributes to higher environmental degradation
What causes a dual economy?
Examples?
It arises when there are two different and opposing sets of circumstances that exist simultaneously.
- Wealthy, highly educated people / poor, illiterate people
- A formal urban sector / an informal urban sector
- High-productivity industrial sector / low-productivity traditional sector
- a ‘modern’ commercial agricultural sector / a ‘traditional’ subsistence agricultural sector
What is the poverty cycle (trap)?
The connection between low incomes, low savings, low investment and so on and the idea that poverty perpetuates itself from one generation to the next.
How is poverty transmitted across generations?
- Low-income people are usually low-skilled and have low-productivity, as well as low levels of physical capital (equipment, basic utilities, sanitation)
- They cannot send children to school (can’t pay for school/transport to school)
- Cannot afford medical care or nutrition, causing disease and physical disadvantage.
- They often have large families, so any income is overstretched and insufficient.
