Developing Nations Flashcards
what is economic growth?
- a sustained rise in a country’s productive capacity
- an increase in real value of GDP/GNI per capita
- increases in the productivity of factors of production
what is economic development?
- progress in expanding economic freedom
- sustained improvement in economic/social opportunities
- growth in personal and national capabilities
how can economic growth spur development?
- lifts per capita incomes and raises people out of extreme poverty
- increased GDP/GNI gives house holds and businesses greater financial incentive to save
- creates new jobs
- reduced income and wealth inequality
- faster economic growth generates higher profits
- accelerate changes in production e.g. shift away from a dual economy towards investment in manufacturing.
- higher tax revenue for govt to use
what are the common characteristics of developing nations?
- relatively low income per capita
- lower absolute levels of productivity
- high dependency on export incomes from commodities/low export diversification
- large share of the population living in rural areas and employed agriculture
- limited scope and support provided by a welfare system
- a larger informal sector for example in partial subsistence farming
- many industries in low income countries are distanced from technological frontiers
- relatively fast growth of population and a younger average age
- rapid urbanisation and large scale rural-urban migration
- weakness in infrastructure such as telecoms
- weakness in institutions such as the govt
- relatively higher tariffs and other import controls
- tendency to have capital controls
- lower access to advanced markets due to trade barriers
what is the primary product dependence?
many developing countries continue to have high dependence on extracting & exporting primary commodities
strategies for reducing primary product dependence?
- better government
- stabilisation fund / sovereign wealth fund
- higher taxes
- diversification
what is capital flight?
the uncertainty and rapid movement of large sums of money out of a country
what is an infrastructure gap?
it limits economic growth and human development because:
- they increase supply costs for businesses
- reduce geographical mobility of labour
- damage export competitiveness
- make a country less attractive to FDI
- make an economy vulnerable to the effect of climate change
- contribute to gender inequality
why is malnutrition a barrier to development?
high rates of malnutrition can severely impair development and bring untold human misery:
- impairs brain development
- half of all child deaths
- increases risk of HIV
- less time in school
what are human capital inadequacies?
- human capital refers to skills, experience, attitudes, aptitudes of the human input into production
what is the savings gap?
- savings are needed for cap investment
- in smaller low income nations high levels of poverty make it hard to generate sufficient savings
- increases reliance on aid or borrowing from overseas
ways to reduce the incidence of malnutrition?
- spending on nutrition education and provision of nutrient supplements
- growth monitoring schemes for the newly born infants
- targeting cultural norms
- direct cash transfers to vulnerable households
- govt subsidies for grain prices and export bans on domestically produced foods
- higher market prices paid to small scale farmers
what are some institutions that need to function well in order for development progress to happen?
- education systems
- health care systems
- political institutions
- legal institutions
- financial institutions
why is corruption a barrier to growth and development?
- corruption is due to a failure of governing institutions who lack transparency both in where their tax revenues are coming from and in how state resources are spent
why is gender equality a barrier to growth and development?
- the unequal opportunities available to hundreds of women around the world represent one of the biggest barriers to growth and development
- pregnancy poverty marriage are the main reasons for girls dropping out of school
why does inadequate competition in markets act as a barrier to growth and development?
- many markets have low levels of contestability in developing nations
- higher prices reduce real incomes and this has a particularly regressive effect on the poorest households
what is the brain drain?
the loss of highly skilled people to another region, country or industry, where they can work in a better environment and earn more money.
