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Economics - MacroEconomics > 5. The International Economy - Economic Growth & Development > Flashcards

5. The International Economy - Economic Growth & Development Flashcards

1
Q

What is economic growth?

A

Economic growth is the % change in real GDP for an economy.

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2
Q

What is economic development?

A

Economic development is an improvement in the quality of life and living standards of a population - we would expect this to be linked to economic growth but we shouldn’t assume this.

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3
Q

What is the difference between economic growth and development?

A

Economic growth is about a rise in real national output, whereas economic growth is about a rise in the living conditions of a population - they are likely to correlate but don’t always.

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4
Q

What are the causes of economic growth?

A

For economic growth an economy needs to shift there PPF outwards - this is done by increasing the quality or quantity of FOPs - or improving technology. Factors affecting growth include;Natural Resources, Infrastructure, Population, Technology, Law, Human Capital, Productivity, Political Structure

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5
Q

What are the barriers to economic growth?

A

The Poverty Cycle, Political Instability - War, Political Corruption, Lack of property rights and laws, Inequality, Poor Infrastructure, International Trade barriers, Debt, Capital flight, Brain drain, Cultural/Religious factors

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6
Q

What are the characteristics of a boom - stemming from economic growth?

A

Increased output, aggregate demand, GDP & prices, more jobs, government spending > taxation, optimism

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7
Q

What are the characteristics of a recession - stemming from a fall in economic growth?

A

Decreased output, aggregate demand, GDP & prices, fewer jobs, government spending < taxation, pessimism

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8
Q

What do the impacts of a recession depend on?

A

How deep and protracted the recession is/was.

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9
Q

What is the economic cycle - what are the different parts of it, and what is associated with each part?

A

The economic cycle is a graph showing the rate of economic growth over time. It can be divided up into different parts; booms - when the rate of growth rises significantly above the trend rate, recessions - when the rate of growth falls significantly below the trend rate, upturns - when there is a rise in the growth rate, downturns - when there is a fall in the growth rate.

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10
Q

What are the benefits of economic growth? (+analysis chain)?

A

Economic Growth - less poverty, better living standards - better productivity and international competitiveness - less unemployment - potentially less inflation, if supply side growth and potentially stronger BoP if exports are made

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11
Q

What are the costs of economic growth? (+analysis chain)?

A

Economic Growth - increased pollution and environmental damage - increased trade may lead to cultural erosion - economic growth, if demand side, will probably create inflation and there is a chance it may create a trade deficit also if countries import heavily

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12
Q

What does the effects of economic growth depend on?

A

The effect of economic growth depend on;

  1. The scale of growth
  2. The duration of growth
  3. The type of growth
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13
Q

What is your case study for the effects of economic growth? (include stats, and policies to improve)

A

…

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14
Q

What are the different indicators of development?

A
  1. Real GDP
  2. GDP/capita
  3. GNI/capita
  4. Green GDP
  5. HDI
  6. Misery Index
    SEE MMP DECKS FOR MORE DETAIL
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15
Q

What are the common characteristics for less-developed economies (LDE’s)?

A
  1. Low per capita income and widespread poverty
  2. Shortage of capital
  3. Population explosion and high dependency
  4. Massive unemployment
  5. Predominance of agriculture
  6. Unproductive investment
  7. Low levels of productivity
  8. Over Dependence on Agriculture
  9. Out Flow of Best Brain
  10. Inflation
  11. High Degree of Illiteracy
  12. Inadequate infrastructure
  13. Trade deficit
  14. Circle of poverty
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16
Q

What is your first case study for an LDE?

A

…

17
Q

What is your second case study for an LDE?

A

…

18
Q

What is your third case study for an LDE?

A

…

19
Q

What is an alternative measure of development - SPI?

A

SPI is the Social Progress Index - The Social Progress Index is an aggregate index of social and environmental indicators that capture three dimensions of social progress: Basic Human Needs, Foundations of Wellbeing, and Opportunity.

20
Q

What is aid?

A

Foreign aid is money that one country voluntarily transfers to another, which can take the form of a gift, a grant or a loan.

21
Q

What is trade?

A

Trade is a basic economic concept involving the buying and selling of goods and services, with compensation paid by a buyer to a seller, or the exchange of goods or services between parties.
FOR MORE ON TRADE AS A POLICY TO HELP ECONOMIC DEVELOPMENT SEE THE ‘TRADE’ CHAPTER

22
Q

What are the different types of aid?

A
  1. Bilateral aid: Aid on a country-to-country basis
  2. Multi-lateral aid: Aid channelled through international bodies
  3. Project aid: Direct financing of specific projects for a donor country
  4. Humanitarian aid: Emergency disaster relief, food aid, refugee relief and disaster preparedness
  5. Tied aid: i.e. projects tied to suppliers in the donor country
  6. Debt relief – this may take the form of cancellation, rescheduling, refinancing or re-organisation of a country’s external debts
23
Q

What are the strengths and weaknesses of aid?

A

For;
1. Well directed and targeted aid can enhance a country’s growth potential
2. Project aid can fast forward investment in critical infrastructure projects - an increase in the capital stock lifts a country’s growth potential
3. Long term aid for health and education projects - builds human capital and raises productivity.
4. Well targeted aid might add around 0.5% to growth rate of poorest countries - this benefits donor countries too as trade grows
Against;
1. In poorly governed countries much of the aid flow to politicians and relatively little may directly benefit the poorest communities in greatest need.
2. Aid can act as a barrier to true democracy - politicians pay more attention to aid donors than to their citizens. Aid-dependent governments are accountable to donors, not to their population
3. A dependency culture on aid might be generated - the aid paradox is that aid tends to be most effective where it is needed least

24
Q

What are the strengths and weaknesses of trade?

A

For;
1. Generates growth through increased commercial opportunities - reduces poverty
2. Helps improve productivity - increases competitiveness
3. Allows export diversification as new markets are opened up
4. Exchange of knowledge - encourages innovation and invention
5. Trade increase quality and choice for consumers while reducing prices
6. Trade creates employment opportunities
7. Trade creates good international relationships
Against;
1. Trade may lead to rising inflation
2. Unfair terms of trade may see developing countries be exploited
3. Trade for some nations may worsen their Balance of Payments
4. Trade may make some countries dependent on exports - food shortages etc

25
Q

What determines whether aid or trade will be successful or not?

A
  1. Corruption - what it’s used for
  2. How well directed/targeted it is
  3. The terms of trade - fair or not
  4. What trade is in
26
Q

What are NGOs and what are some examples?

A

Non-Government Organisations - examples of which are; Oxfam, Save the Children and Christian Aid. They often give money to people who have been affected by a massive disaster. These groups tend not to get money from governments. That’s why they are called non-governmental organisations

27
Q

Which is better aid or trade and why?

A

Trade is better than aid because developing countries need hand ups not hand outs. By trading with them we allow them to develop there own businesses and industries and begin to move through the stages of development. Aid is simply a short-term solution, it may even encourage inefficiencies in some cases.

28
Q

What other policies are there to promote growth and development?

A

Alternative policies to promote economic growth and development include;

  1. Macroeconomic Stability
  2. Less Restrictive Regulation and Tackle Corruption
  3. Privatisation and De-regulation
  4. Effective Tax Structure and Tax Collection
  5. Investment in Public Services
  6. Diversification away from agriculture

Economics - MacroEconomics (36 decks)

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