4.1.1 Growing economies Flashcards
How is Economics Growth Defined?
An increase in a country’s productive capacity.
How is Emerging Economics Defined?
The economies of developing countries where there is rapid growth, but also significant risk.
How is Human Development index (HDI) defined?
A collection of statistics that are combined into an index, ranking countries according to their human development.
How is Literacy rate defined?
The Percentage of adults (over 15) that can read and write
How is Purchasing Power Parity (PPP) defined?
A measure of real growth that uses the price of purchasing a standard basket of goods and services in order to compare prices across economies.
Why do Investors like Emerging Markets?
they are likely to grow more quickly than more mature markets.
-Therefore a business should be able to increase profits and dividends.
what happens when an Emerging Market is experiencing an increase in average income?
- Likely due to the middle classes expanding
- This increase in income allows consumers to spend more
- Buying more domestics goods encourages the growth of domestic firms –> increased market power –> compete internationally
- Consumers may also buy more imported goods and services –> increasing their profitability and making emerging markets more attractive to new entrants.
How is GDP defined?
A common measure of national income, output or employment.
total value of what a country produces in a year
What are the implications of economic growth for individuals and businesses?
- Growth, especially in emerging markets are attractive to new entrants, create trade opportunities and ;alter existing employment patterns.
How does Economic growth create trade opportunities and what is the implications for both individuals and businesses?
- it is likely that disposable income is rising so this increases the overall demand for goods and services.
- Demand is likely to become income elastic, providing greater opportunities for increase revenues and profit.
- These goods/ services can be produced domestically or imported from abroad, creating many opportunities for trade.
How does Economic growth alter existing employment patterns and what is the implications for both individuals and businesses ?
- if there is low levels of employment –> people have no disposable income –> cant buy your product/service –> not a good idea to export there
- however, unemployed people are looking for work so a firm could find a pool of labour to make goods that could be exported elsewhere –> so directly investing in a country like building a factory might be a good idea.
- future employment trends are also important –> new technology may mean fewer workers are required –> making cheap labour no longer a significant comparative advantage for an emerging economy as it once was.
What data from a countries GDP could be used by a business as an indicator of a countries growth?
- GDP figures do indicate the value for economic activity and can be calculated to show the value of all of the goods, produced, or purchased in an economy
- Prefer using PPP exchange rate –> good idea of what buyers in different countries can afford and what their overall welfare might be in real terms.
How is literacy used as an indicator of a countries growth?
- the quality of employees. both as workers and potential consumers
- a company looking to invest wants the most productive employees they can find at the lowest costs.
- a company exporting to a country will want to consider the consumers they want to sell to, understanding their potential consumers they will know how to market its goods and services to them
How is Health an indicator of a countries growth?
- An assessment of the health of a population may include –> life expectancy at birth, infant and maternal mortality, pollution exposure and access to clean water.
- The World Health Organisation collects and evaluates statistics relating to a broad range of indicators that can be used to assess population health
What is the Human Development Index (HDI)?
- The HDI combines statistics on life expectancy, education and income for a particular country into a single rankable value.
- Life Expectancy –> how many years can someone expect to live, indicated the overall health of a nation as well as the quality of its health care and social systems.
