4.3 Emerging And Developing Economies Flashcards
What is economic development?
Economic development is the sustainable increase in living standards for a country, typically characterised by increases in life span etc
What are the advantages of of using HDI?
- Composite indicator - multiple factors
- Incorporates most important metrics
- Widely used
- Help identify education levels are holding back government policy
- Citizens can understand their quality of life
What are the disadvantages of using HDI?
- Doesn’t measure inequality
- Doesn’t measure or compare poverty levels
- Doesn’t provide useful short term information - time lag
What is is the inequality adjusted HDI (IHDI)?
It adjusts the HDI for inequality in the distribution of each dimension across the population
What is the multi-dimensional poverty index (MPI)?
A poverty measure that reflects the multiple deprivations that poor people face in education, health and living standards
What are the factors that influence growth and development?
- Primary product dependency
- Volatility of commodity prices
- The savings gap: Harrod - Domar model
4: The foresight currency gaps - Capital flight
- Demographic factors
- Access to credit & banking
- Infrastructure
- Education & skills
- Absence of property rights
What is the Harrod Domar model?
It identifies that increased savings will lead to higher capital stock - higher economic growth - more increased savings
What are foreign currency gaps?
Occur when currency outflows are constantly higher than foreign currency inflows
What is capital flight?
Capital flight is when money or assets rapidly leave a country
What are the non economic factors influencing growth and development?
- Corruption
- Poor governance
- Wars
- Political instability
- Geography
What are market orientated strategies?
Strategies that create the conditions of private individuals & firms to pursue economic activity with the aim of maximising profit
What are some market orientated strategies?
- Trade liberalisation
- Foreign Direct Investment (FDI)
- Subsidy removal
- Floating exchange rate systems
- Microfinance
- Privatisation
What is an interventionist strategy?
Interventionist strategies are put in place by governments to correct the failings of the free market & promote welfare/ development of its citizens
What are some interventionist strategies?
- Human capital
- Protectionism
- Managed exchange rates
- Infrastructure
- Join ventures
- Buffer stocks
What are buffer stocks?
Buffer stocks are created when the government buys up supplies of agricultural products when harvests are plentiful, stores them and then sells them when supplies are low
