Developed and less-developed economies Flashcards
List the characteristics of a developed economy
- High level of human and economic development
- Wide range of industries
- Well developed road, power and communications networks
- Skilled and educated workforce
- High average incomes and living standards
- Long average life expectancy
List the characteristics of a less-developed/developing economy
- Low level of human and economic development and diversification
- Low industrial development
- Lack of infrastructure
- Low levels of education and skills
- Low average incomes and poor living standards
- Low average life expectancy
List the characteristics of a rapidly developing/newly industrialised economy
- Expanding manufacturing and services sectors
- Rapid development of modern infrastructure
- Rising incomes and living standards
- Improving health care, diet and life expectancy
List the reasons why some countries remain less developed compared with others
- Over-dependence on subsistence farming to provide jobs and incomes
- International trade is dominated by developed nations who are able to control world prices for natural resources exported from less-developed economies
- Lack of capital to invest in modern infrastructure to support businesses and communities
- Insufficient investment in infrastructure, education and health care
- Low skilled and poorly educated workforce
- Low level of effective consumer demand
- Rapid population growth
- Other factors such as famines, wars, corruption, etc.
Complete the cycle of poverty
List the 8 UN millennium development goals
- Eradicate extreme poverty
- Achieve universal primary education
- Promote gender equality and empower women
- Reduce child mortality
- Improve maternal health
- Combat HIV/AIDS, malaria and other diseases
- Ensure environmental stability
- Develop a global partnership for development
Define
absolute poverty
An economic condition of lacking both money and basic necessities needed to successfully live, such as food, water, education, health care and shelter.
The extent of absolute poverty is usually measured by the number of people living below a certain income threshold, usually around $1 a day. However, absolute poverty also depends on access to goods and services.
Define
relative poverty
An economic condition of having fewer resources than others in the same society, usually measured by the extent to which a person’s or household’s financial resources fall below the average income level of others in their economy.
List 7 commonly used measures and indicators of economic development and living standards
- GDP per capita
- Population on less than $1 per day
- Life expectancy at birth
- Adult literacy rate
- Access to safe water supplies and sanitation
- Ownership of consumer goods
- Proportion of workers in agriculture
Why is GDP per capita not a good measure of economic development and living standards?
- It does not take into account of what and how much people can buy with their incomes
- The distribution of incomes may be uneven, so a relatively smal group of people with large incomes will bring the GDP per capita up even though other people’s living standards have not improved
- Real GDP per capita excludes unpaid work (e.g. charity work, housework), and so understates total output and well-being
- It takes no account of non-economic aspects such as the quality of the environment, political and cutural freedom, and level of security against violence and crime
Define
human development index
and state what indicators it includes
A statistical measure complied from different development indicators by the United Nations to measure and contrast economic development in different countries.
- GDP per capita
- Years of schooling
- Life expectancy
Define
human poverty index
and state what indicators it includes
A statistical measure complied from different development indicators by the United Nations used to compare and rank the scale and extent of poverty in developing and developed countries. There is an index (HPI-1) compiled for developing countries and an index (HPI-2) for developed countries.
- probability at birth of dying before the age of 40 (HPI-1) or 60 (HPI-2)
- % of people unable to read or write (HPI-1) very well (HPI-2)
- population below income poverty line (HPI-1) or less than 50% of average income (HPI-2)
- population without sustainable access to an improved water source (HPI-1)
- proportion of underweight children (HPI-1)
- proportion of people unemployed for 12 months or more (HPI-2)
In what ways may governments intervene in their economies to reduce absolute and relative poverty?
- measures to reduce unemployment, e.g. expansionary fiscal and monetary policies, government training
- progressive taxation reduces income inequality and relative poverty
- money raised from taxes can fund welfare services and provide income support, as well as subsidisng the building of low-cost homes, and the provision of free health care and travel
- minimum wage laws increase the wages of the lowest paid employees
- improvement of the quality and quantity of education
- governments may attract inward investment from overseas firms to provide jobs, incomes and new skills
List and explain 5 types of overseas aid
- Food aid - the EU and USA often overproduce food that is expensive to store, so it is given as aid
- Financial aid - however, this is oftened governed by a number of conditions
- Technological aid - e.g. modern power plants, advanced machinery
- Loans - money is borrowed from governments of other countries, the International Monetary Fund (IMF) and the World Bank
- Debt relief - debt causes problems in LEDCs, so debt is fully or partially cancelled, e.g. the Highly Indebted Poor Countries (HIPC) programme provides debt relief and low-interest loans
List the arguments against overseas aid
- food aid means people may not buy produce from local farmers, and food may be stolen and sold illegally
- workers need to be trained to use new methods and machines, so overseas experts must be provided
- aid budgets are often used employing expensive overseas firms and consultants rather than alleviating local poverty
- many LEDCs are poorly managed and do not have the skills they need to invest financial aid wisely
- some governments are corrupt or ruled by dictators so financial aid is misused
- full or partial cancellation of public debt may encourage governments to be financially irresponsible again
