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Macro Year 13 > Chapter 6 - Development > Flashcards

Chapter 6 - Development Flashcards

1
Q

BRIC

A

Brazil, Russia, India, China

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2
Q

Developed countries

A

High income countries

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3
Q

Developing countries

A

Middle and low income countries

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4
Q

Economic development

A

Improvement over time of a wide range of economic indicators

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5
Q

Emerging countries

A

Middle income countries which could become high income countries over the 20/30 years

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6
Q

Tiger economy

A

An economy which undergoes rapid economic growth

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7
Q

Human Development Index

A

Health: life expectancy at birth
Education: mean years of schooling of adults aged +25 and the expected years of schooling of a 5 year old
Income: real GNI/capita at purchasing power parity

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8
Q

Advantages of HDI

A

Easy to calculate
Takes into account 3 factors - multi factor index

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9
Q

Disadvantages of HDI

A

Health doesn’t include quality of life
Education doesn’t include quality and success
Doesn’t include equality of income
Other factors affect development

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10
Q

Other measures of economic development

A
  1. The percentage of adult male labour in agriculture
  2. Access to clean water
  3. Energy consumption
  4. Access to internet/thousand of the population
  5. Access to mobile phones/thousand of the population
  6. Access to doctors/thousand of the population
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11
Q

Comodities and volatile prices (Constraints on growth and development - Impact of economic factors in countries)

A

Inelastic in demand and supply
Developed countries import them
Fluctuations make it hard to predict SR + LR revenues
Discourages investment
Makes GDP change drastically

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12
Q

Primary product dependency
(Constraints on growth and development - Impact of economic factors in countries)

A

Prebish-Singer hypothesis: in the long run, the price of commodities will fall
Developing depend on primary sector
Commodities - inferior goods while manufactured are normal goods - unable to develop

Eval: dutch disease
- discover natural resource, increase its demand and thus its price, increase currency demand
- appreciation, export price rise, decrease competitiveness
BUT: essential good - increase export revenue, increase investment, increase development

Subeval: premature industrialisation

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13
Q

Savings Gap (Constraints on growth and development - Impact of economic factors in countries)

A

Harrod - Domar model states investment, savings and technology changes are key in economic growth

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14
Q

Harrod Domar model

A

Increase national savings
Increase investment
Larger capital stock available
Increase productivity
Increase in real GDP/GNI
Increase income/capita

Repeat

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15
Q

Foreign currency gap (Constraints on growth and development - Impact of economic factors in countries)

A

Exports from a developing country are too low compared to imports
The country doesn’t have foreign currency to pay for imports

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16
Q

Capital flight (Constraints on growth and development - Impact of economic factors in countries)

A

Take money, assets, and investments out of the country

Reduced domestic investment
Weakened domestic currency
Loss of tax revenue
Higher borrowing costs

17
Q

Debt (Constraints on growth and development - Impact of economic factors in countries)

A

Money that a country owes to foreign creditors
- occurs when a country borrows funds
- loans, bonds etc

18
Q

Demographic factors (Constraints on growth and development - Impact of economic factors in countries)

A

Ageing population = harder to generate output

19
Q

Infrastructure (Constraints on growth and development - Impact of economic factors in countries)

A

Developed = increase the value of infrastructure
Developing: Deters FDI and Reduces output

20
Q

Education and skills (Constraints on growth and development - Impact of economic factors in countries)

A

Developed = increased quality
EVAL: structural unemployment increases in developed due to technical advances

21
Q

Non economic factors which deter development

A

Corruption
Poor governance - no property rights = decrease investment
Civil wars
Migration
Terrorism

22
Q

Measures to promote growth + development

A

Market orientated: rely upon free markets to deliver economic development
Interventionist: governments play a leading role, regulating and manipulating markets

23
Q

Trade liberalisation (market orientated)

A

Removal of trade barriers - free trade - tariff graph

Benefit:
- export led growth - rise in AD
- specialisation

Eval:
- not protecting domestic industries and infant industries - due to increased international competitiveness

24
Q

Promotion of FDI (market orientated)

A

FDI: investment from abroad

Investment increase AD
- harrod domar model

Eval: not protecting local businesses or labour

25
Q

Removal of government subsidies (market orientated)

A

Subsidies - increase investment and output and productivity etc

Eval: dependence and might be poorly targeted

26
Q

Microfinance schemes (KIVA)- (market orientated)

A

Schemes in which individuals (or businesses) can lend small amount of revenue to developing countries (with no interest) for investment

Benefit:
- access to finance for investment

Eval:
- dependency
- finance not used for investment - unsustainable?

27
Q

Protectionism (interventionist orientated)

A

Adding tariffs - graph
Increase cost of importing
Protect infant industries

Eval: retaliation

28
Q

Promoting joint ventures with TNCs (interventionist orientated)

A

Increase jobs and decrease unemployment
Spreads risk

Eval: poor working conditions

29
Q

Buffer stock schemes (interventionist orientated)

A

Government buys when excess and sells when shortage
Keeps prices stable - not volatile

GRAPH

Eval: moral hazard

30
Q

Industrialisation (other strategies)

A

Lewis model

Developing countries focus on agriculture and could move towards manufacturing

31
Q

Development of tourism (other strategies)

A

Tourism causes jobs and can help reduce unemployment
- dependency on primary product reduced

32
Q

The role of international institutions

A

World Bank - loan funds to member countries
- Aim: promote economic and social progress
IMF: promote monetary cooperation + help free trade
NGO: aim to raise the voices of ordinary citizens
- Health care, human rights or environment

Macro Year 13 (6 decks)

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