6.5 Economic Growth and Development

Question 1

Define economic growth

Answer 1

-Economic growth is the increase in a country’s real national output.

-This is caused by increases in the quality or quantity of factors of production, which cause an outward shift in the PPF.

Question 2

Define economic development

Answer 2

-Economic development refers to living standards, freedom (from oppression) and life expectancy

-Essentially, it covers a more moral side to economic growth and it is normative.

-Development is also concerned with how sustainable the economy is and
whether the needs of future generations can be met.

Question 3

What are the characteristics of LEDCs?

Answer 3

Less economically developed countries tend to be characterised by the
following features:

• Low life expectancies
• High mortality rates
• High dependency ratio
• Low GDP
• Fast population growth
• Low levels of education
• Poor standard of living
• Poor nutrition, lack of access to clean, safe drinking water and a lack of sanitation
• Poor or absent health care provision

Question 4

Indicators of development: Human development index HDI

What are the components of HDI?

Answer 4

-Education-this component combines the statistics of the mean number of years of schooling and the expected years of schooling.

-Life expectancy-this component uses a life expectancy range of 25 to 85 years.

-Standard of living-this component measures GNI adjusted to PPP per capita. GDP was used instead of GNI, but to account for remittances and foreign aid,
-GNI is now used, since it reflects average income per person.

Question 5

What does the HDI measure?

Answer 5

-It measures economic and social welfare of countries over time.
- A value close to 1 is indicative of a high level of economic development.
- A value close to 0 suggests a low level of development.