4.3- Emerging Economies Flashcards
What is the Human Development Index(HDI)
The HDI is used to measure the quality of life in a country
The HDI combines; health(measured as life expectancy), education(measured as average time spent in school) and standard of living(measured by GNI per capita, using PPP)
How is the HDI used?
- Can be used to measure changes in development levels over time in a country
- It can be used to compare levels of development between countries
- Countires can be ranked in levels of development
- > 0.8 = High development
- < 0.8 > 0.5 = Medium level of development
- < 0.5 = Low level of development
What are three advantages of using the HDI
- More than one indicator is used to determine the HDI therefore, it is reliable
- Progress can be measured over time and can be compared to other countries
- Countries with low development can be given aid. The HDI helps determine which countries have low development
What are three disadvantages of using the HDI
- A long life expectancy does not mean a high quality of life
- Measuring the average number of years someone spends in education does not measure the quality of teaching e.g Mr Seddon Dyer
- Using the GNI can lead to innacurate comparisons as the the GNI does not take into account the hidden economy
- The HDI does not measure the extent of inequality in a country
Other ways of measuring development(1)
- )Measuring the percentage of labour in agriculture
- workers are paid very little in agriculture
- as countries become more developed, they tend to use more machinery
- countries that are highly developed have low levels of labour in agriculture
Other ways of measuring development(2)
Number of mobile phones in the population
- mobile phones imorove communication and trading which can lead to more economic development
- As mobile phones are relatively expensive, a high number of them indicates that wages are high enough to pay for them
Other ways to measure development(3)
- Access to clean water
- Levels of political and social freedom
- Levels of disease
- Levels of malnutrition
What are the limits to growth and development
- Poor infrastructure
- Human capital inadequacies
- Low levels of investment
- Primary product dependency
- Corruption and wars
How does poor infrastructure limit development?
- If energy supplies are low, firms won’t be able to operate efficiently
- Poor transport links means goods can’t be moved around
- Telephone and internet services being scarce means businesses aren’t able to communicate with customers
- Poor infrastructure makes it hard to attract FDI
How do human capital inadequacies limit development?
- If a countriy’s population grows faster than its economy, there is a fall in GNI per capita
- A fast growing population means there will be pressure on a country’s education system
⇒If children do not go to school, it leads to less human capital as there are lower skilled workers
- Disease also leads to low productivity as workers can’t work
How does investment limit development?
- If savings are low, people do not invest(savings gap)
- Capital flight - When people start holding their savings abroad so it can’t be taxed. This leads to a lack of domestic investment therefore lower economic growth
- A foreing exchange gap- A country has more capital outflows than inflows(imports are greater than exports)
How does primary product dependency limit development?
- Demand for these products is price inelastic
- Commodity prices are volatile whic means that the incomes of those who produce primary products can change drastically
- Developed countries can use protectionist policies
- Prebisch-Singer hypothesis
What is the Prebisch-Singer hypothesis?
- Demand for primary products is price inelastic
- Demand for manaufactured goods is income elastic
- As income rises, demand for manufactured goods increases which leads to an increase in price
- Countries exporting mainly primaryb products will find they are able to import less manufactured goods for a given level exports
How do corruption and wars limit development?
- Corruption leads to a country’s resources not being allocated efficiently which means that the country becomes less productive
What are the two types of strategies to promote development?
- Market-oriented strategies
- interventionist strategies
How do buffer stock schemes help to promote development?
Buffer stocks reduce price volatility. If supply increases as a result of a good harvest and price gets too low, The government buys the surplus whuch decreases supply leading to price increasing to an acceptable amount.If there is a bad harvest and there is not enough supply, price increases. The government then releases its stores to increase supply which decreases price
