4.3 Development Flashcards
Economic Development
Life sustaining goods and services- to increase the availability and widen the distribution of basic goods
Higher incomes- raising living standards, provision of jobs, better education
Freedom to make social and economic choices
Advanced or Developed Economies
Industrialised, high tech, not focused on agriculture, low population growth, high GNI
Developing economies
Reliant on agriculture
Low tech
High population growth
Reliant on aid
Possibly corrupt/ poor government
Emerging Economies
Rapid economic growth
Increased investment
Manufacturing
High income growth
Inequality
HDI
Human Development Index
Developed by the UN to identify the stage of development for economy
3 Aspects of HDI
Knowledge- Mean years of schooling and the expected years of schooling
Long+ Healthy life- Calculated using a min value of life expectancy of 25 years and maximum value of 85 years
Decent Standard of living- Gross national income (GNI) per capita adjusted to PPP standard
Advantages of HDI
Allows for comparisons between countries
Education and health are important also like GDP and so it provides the information along with infrastructure and opportunities
Disadvantages of HDI
Doesn’t consider human rights, gender equality or peoples cultural identity
Does not take into account the environment
Doesn’t consider distribution of income
Economic Factors influencing development
Dependency on one product
Savings gap- household income was low so savings are hard to make
Lack of foreign currency- weak currency so cannot afford to import tech Potential investment is diverted to other countries
Other factors influencing development
Geography
Demographic
Debt
Access to credit
Infrastructure
Education/ Skills
Lack of property rights
Political instability
Corruption
Ways to increase LRAS
Labour supply increasing
Capital- investment
Efficiency of allocation of resources e.g. shifting resources from rural to urban areas
Advancements in tech
Improvements in institutions like the banking system
Market based strategy to promote development
By promotion of enterprise and trade e.g. trade liberalisation, trade blocs, FDI
Interventionist strategy to promote development
Gov interventionist led to improve aggregate supply and infrastructure e.g. protectionism, managed exchange rates
Advantages of Market orientated strategies
Increased…
Trade
Entrepreneurship
Market efficiencies
Efficient allocation of resources
Disadvantages of Mkt orientated strategies
Inequality
Danger of monopolies
Policies will not improve health, education or infrastructure
Increased prices
