4.3.2C - facotrs influencing growth and development Flashcards
What capital is used in capital flight?
Financial e.g. financial assets or money. Not goods that are used to produce other goods.
define dependency ratio
ratio of number of dependents to total working age population in a country
define deomgraphy
composition of human population
issue with high pop growth in LEDC
The high population growth is caused by high birth rates, which increases the number of dependents within a country but does not immediately increase those of working age. It places strains on the education system and leads to youth unemployment.
but in the long run, youthful populations with larger workforces ο greater potential for economic growth
e.g kenya nigeria
analyse population growth
- the larger the size of the working population the greater the productive capacity of the economy will be.
2. the larger the size of the non-working population (under 16 and over 60-65) the greater the burden on the working population and state (as they must support them through health care and social care).
Outline capital flight
There is less money available for investment.
- Capital flight leads to a depreciation of the exchange rate because inward investment falls and outward investment rises.
- As a result, currency speculators sell the domestic currency in a big to profit from the movement in the exchange rates.
-Consequently, the foreign currency gap problem is exacerbated.
-Inflation is likely to rise as the depreciation in the exchange rate pushes up import prices. Inward FDI becomes less attractive as investors view the country as a greater risk than before.
extra dont need to memorise this
examples of china controlling pop growth
- deng xiaoping introduced one child policy in 1979
- Chinaβs population approached one billion in the late 1970s, the government concerned about what effect this would have on economic growth.
- but now policy causes ageing pop: By 2050, more than a quarter of the population will be over 65.
african population forecast
The population of Africa is expected to more than double by 2050, complicating
efforts to reduce hunger.
why is debt a barrier to development
High debt burden = large amount of government spending used to service debt = less available to spend in other areas e.g. public goods, education etc = infrastructure, labour force etc weaker than it could be = weaker economic growth.
could even raise taxes, limiting growth to service debt
why is debt servicing suddenly an issue
During the 1970s and 1980s, developing countries received vast loans from banks in
the developed world. Now, they suffer from high levels of interest repayment ;
sometimes even higher than the loans and aid they receive from developed
countries,
- debt service is principal and interest
debt service ratio?
(ππππ‘ π πππ£πππ πππ¦ππππ‘π (πππππππππ + πππ‘ππππ π‘))
/(ππ₯ππππ‘ ππππππππ )
top 4 countries with highesy debt to GDP ratio
Venezuela β 350%
Japan β 266%
Sudan β 259%
Greece β 206%
Describe access to credit and banking in LEDC
- limited access -bc lack of savings (high MPC) means banks have no funds to lend
- so lack of access to credit means limited funds for investment and also inability to save for furture
- families might use loan sharks with high interest rates so they are permanently indebted
define external debt
External debt is owed by governments, households and businesses in a country to external (overseas) creditors
define infrastructure
The transport links, communications networks, sewage systems, energy plants and other facilities essential for the efficient functioning of a country and its economy.
