5.4 - Differences in Economic Development

Question 1

Economic development

Answer 1

The sustainable increase in living standards for a country, typically characterised by increases in life span, education levels, & income

Question 2

Causes of differences in development (name 4)

Answer 2

• Differences in income
• Differences in productivity
• Differences in population growth
• Differences in economic sector sizes
• Differences in saving & investment
• Differences in education
• Differences in heathcare

Question 3

Explain how income differences in a country can lead to differences in development

Answer 3

Countries with a higher GDP/capita tend to be more developed
Even with high GDP/capita, there may be significant inequality in the distribution of income resulting in poor living standards for many

Question 4

Explain how productivity differences in a country can lead to differences in development

Answer 4

Higher levels of productivity are rewarded with higher wages, which leads to a better standard of living

Question 5

Explain how population growth differences in a country can lead to differences in development

Answer 5

• More densely populated countries or cities face more challenges
• A larger population can mean higher tax revenues for the government but at the same time, government expenditure on services is spread across more people
• Poorer economies are characterised by less government spending/capita

Question 6

Explain how economic sector size differences in a country can lead to differences in development

Answer 6

Economies with a larger proportion of secondary & tertiary activity tend to be more developed due to the wages associated with each sector
* Primary: workers are usually paid low wages due to the unskilled nature of the job
* Secondary: since workers add value to the raw materials & these products sell for higher profits; wages tend to be higher than primary sector wages
* Tertiary: workers are paid the highest; heir jobs often require highly valued skills that take years to acquire & the products they sell or services they provide can be complex & expensive

Question 7

Explain how savings and investment differences in a country can lead to differences in development

Answer 7

Increased savings → increased investment → higher capital stock → higher economic growth → increased savings
* If the dependency ratio is high it means there is less money available for savings & investment

Question 8

Explain how educational differences in a country can lead to differences in development

Answer 8

These directly influence the level of skill in an economy: Improved skills results in higher productivity & wages

Question 9

Explain how healthcare differences in a country can lead to differences in development

Answer 9

The level of health directly impacts productivity of labour
Productivity influences output & income
* Developed economies tend to have healthy workforces
* The less developed the economy, the more sickness & disease there is