4.3 - Emerging and Developing economies

Question 1

What are the 5 main indicators of development?

Answer 1

1. Access to clean water - 100% in the UK, 94% in India & 76% in Burundi
2. Number of mobile phones - UK = 122 per 100, India = 87 per 100, Burundi = 48 per 100
3. Access to internet = UK = 95%. India = 30%, Burundi = 5%
4. Energy consumption per person - UK = 2764kg of oil per yr, India = 673kg, Burundi = 2.5kg
5. Proportion of agricultural work - UK = 1% of economy, India = 44%, Burundi = 91%

Question 2

What is economics development?

Answer 2

An increase in living standards in an economy

Question 3

What is HDI and how is it measured?

Answer 3

• Measure of a country’s development through 3 indicators: education, health, living standards
• Geometric mean is calculated

Question 4

What do HDI values mean? Give examples of countries with varying HDI values.

Answer 4

• Ranges from 0-1 (where 1 is perfect)
• 0-0.49 -> low development (Burundi = 0.40)
• 0.50-0.69 -> medium development (India = 0.62)
• 0.70-0.79 -> high development (China = 0.74)
• 0.80-1.00 (UK = 0.91)

Question 5

What are the 3 dimensions of the HDI?

Answer 5

• Education: compares the no. of years spent in school on average across different countries e.g. UK = 15 yrs, India = 9yrs, Burundi = 7yrs
• Health: takes a child’s average life expectancy at birth e.g. UK = 81yrs, India = 68yrs, Burundi = 57yrs
• Living standards: looks at real GNI per capita e.g. UK = $37,000, India = $5,700, Burundi = $700

Question 6

What are the advantages of using HDI?

Answer 6

• Holistic: looks at the whole of development through 3 important factors -> broad-ranging view of development -> reliable picture
• Good for comparison: easy to compare levels of development across countries -> assess which countries need aid

Question 7

What are the disadvantages of using HDI?

Answer 7

• Omits other indicators: can be unreliable -> when measuring living standards it only looks at income, neglecting access to electricity, internet etc
• Ignores distribution of development: e.g. Israel’s HDI is 0.90 but it has one of the world’s highest Gini coefficients -> unequal distribution of development -> difficult to compare

Question 8

What is IHDI?

Answer 8

• Takes our normal HDI and adjusts it to account for different levels of inequality
• Norway, HDI = 0.95, IHDI = 0.90

Question 9

What is the MPI and what does it calculate?

Answer 9

• Looks at the same 3 indicators as the HDI & IDHI breaking them down into 10 smaller components
• Calculates: 1) No. of people in poverty, 2) Average intensity of poverty -> combines these to produce an overall MPI rating
• High MPI = high poverty

Question 10

What are the 10 components of the MPI?

Answer 10

Education:
- Average yrs spent in school
- No. of children not in school

Health:
- Child mortality
- Nutrition

Living standards:
- Fuel used
- Access to a toilet
- Access to clean water
- Access to electricity
- Types of floor
- Ownership of gadgets

Question 11

What 3 main things hinder growth & development?

Answer 11

1. Low productivity (fall in LRAS -> fall in income -> fall in profit -> no funds for development)
2. High costs (fall in SRAS -> less price competitive -> lower profits -> no funds for development)
3. Low investment (falls in AD & LRAS)

Question 12

What is FDI?

Answer 12

Investments made by a firm in one country into a firm in another country to gain control over a foreign firm

Question 14

How does poor infrastructure constrain growth & development?

Answer 14

Poor infrastructure → Increases costs → Left shift of SRAS → Increases prices → Decreases competitiveness → Less profit → Less corporation tax revenue → Less government spending on development

Question 16

How does poor health constrain growth & development?

Answer 16

Poor health → Low productivity → Increases costs → Less profit → Less corporation tax revenue → Less government spending on development