98 Flashcards
What does an increase in growth imply?
An increase in growth implies the creation of new jobs, an increase in the quality of life as people are able to buy more goods and services, a reduction in income inequality, and a reduction in poverty.
What could be the result of higher profits for firms due to an increase in growth?
Higher profits for firms due to an increase in growth could lead to technological advancements, as firms invest more in physical capital, which could increase the productive capacity of the economy. This could also lead to more job opportunities as firms have the money to hire more people.
What is a fiscal dividend, and how could an increase in growth lead to it?
A fiscal dividend is the additional revenue that a government collects due to an increase in economic growth. An increase in growth could lead to higher profits for firms, which could result in higher corporation tax collection and increased revenue from expenditure taxes like VAT. This creates a fiscal dividend for the government, resulting in higher revenues.
What areas of development could a government spend its fiscal dividend on?
If the government is efficient and has pure motives, it will spend the fiscal dividend on areas that promote development, such as healthcare, education, and infrastructure. Infrastructure, such as roads, bridges, sanitation, and communication, are key pillars of development.
What is the difference between growth and development?
Growth is often used as a measure of a country’s economic success, but it’s important to consider whether this growth is leading to development in terms of improving people’s standards of living and well-being.
What is the major issue that can arise from unequal distribution of growth?
Income inequality is a major issue that can arise from unequal distribution of growth. Even in advanced economies like the UK and USA, GDP may be increasing but this is not necessarily felt by everyone in society.
What are some negative externalities from growth?
Negative externalities from growth can include pollution, resource depletion, and biodiversity loss. These can have long-term consequences that can ultimately hinder development.
What can happen if growth is concentrated in one dominant sector?
If growth is concentrated in one dominant sector, only those involved in that sector may benefit from the growth, leaving the rest of society behind. Nigeria is an example of an economy that is heavily dependent on its oil sector for growth.
What is necessary for inclusive growth that benefits everyone?
Inclusive growth that benefits everyone is ideal for development, but achieving this requires strong government policies and interventions to redistribute income and promote development in other sectors.
