4.1.1 Growing Economies Flashcards
How is the growth rate of a country measured?
- Measured by the annual change in its gross domestic product (GDP)
What are emerging economies?
- Emerging economies are economies that have increasing growth rates but relatively low income per head
What is the growth rate of the Uk in relation to emerging economies?
- UK growth tends to be lower than emerging economies
A key factor why emerging economies are growing at a faster rate than the UK economy is because of growth of the manufacturing sector - UK economy has seen a decline in manufacturing sector as businesses choose to manufacture in emerging economies due to lower labour costs & access to raw materials
China is world’s largest manufacturing economy & exporter of goods
What is globalisation?
- Globalisation is the economic integration of different countries through increasing freedoms in the cross-border movement of people, goods/services, technology & finance
The integration of global economies has impacted national cultures, spread ideas, & speeded up industrialisation in developing nations
Give examples of emerging economies.
- BRICS: Brazil, Russia, India, China & South Africa
- MINT: Mexico, Indonesia, Nigeria & Turkey
Emerging economies have a growing middle class w increasing incomes which allows their citizens to spend more on domestic goods & imported goods from abroad
This increases profitability of international firms who sell their goods & services in these emerging economies
What does economic growth help to do?
- Helps to generate income in a country & there are numerous implications for businesses & individuals within it
What is the impact on a business of economic growth?
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Potential for increased profits as businesses enter new markets & gain more customers
Customers are likely to have income elastic demand, leading to increased sales, revenue & profits - Reduced costs of production as businesses can benefit from lower labour costs & cheaper raw materials in emergin economies
- Increased trade opportunities as demand for goods & services increases
- Increase in investment because as the economy grows, businesses want to expand so they are more likely to invest
- There may also be an increase in foreign direct investment(FDI) as businesses want to benefit from growing economies
What is the impact of economic growth on individuals?
- Reduced unemployment as there is more demand, which requires more labour to increase output
- Increased average incomes as individuals now have rising incomes due to employment, which increases the standard of living
- Access to quality public services as more tax revenue is generated. This government can improve the quantity & quality of public services
What are the four key indicators used to assess the economic growth of emerging economies?
- Gross Domestic Product (GDP) per capita
- Literacy
- Health
- Human Devlopment Index
What is GDP per capita?
- High GDP per capita is associated with a high standard of living
- It is important to look at the GDP per capita over a period of time to see whether there has been an improvement
- GDP per capita can also be a useful indicator to compare the growth in two countries
How is health used as an indicator to assess the economic growth of emerging economies
- Health of a country’s citizens is important to businesses that want to invest in emerging economies, as this will have an impact on the quality of the workforce
Key indicators to consider are average life expectancy, infant mortality rate , access to healthcare and access to clean water
How is literacy used as an indicator to assess economic growth of emerging economies
- Literacy refers to the percentage of adults within an economy who can read & write
- Information about literacy rates is important, as this will determine the quality of the workforce & also the customers they will be selling to
How is the human development index used as an indicator to assess economic growth of emerging economies
- Human Development Index (HDI) combines factors of life expectancy, education & income to determine the quality of development of citizens within a country
- Specifically, HDI looks at life expectancy , mean years of schooling & gross national income per capita (GNI)
Was created by the United Nations and is measured between 0-1 (1 being the highest)
- Problem with using HDI as a measure of development is that:
- Does not account for inequalities within a country
- There is a lack of reliable data in some countries
