Development

Question 1

Measures of Economic Development and their negatives

Answer 1

National Income Figure ( GNI per capita and GDP per capita)
Doesnt take into account the hidden economy which alot of people live well on
HDI

Question 2

What does HDI consider

Answer 2

Education (years of schooling), Health (life expenctancy), standard of living (adjusted for PPP).

Question 3

How is inequality measured

Answer 3

Lorenz Curve and Gini coefficient

Question 4

Why is investment limited in developing countries

Answer 4

Saving gap - when incomes low, saving low, low investment, low amounts of capital. Causing this cycle to continue

Capital flight - when people start holding their saving abroad (because of high tax or politcal instability) causes lack of domestic investment making economic growth more difficult to achieve.

Question 5

Strategies used in international development

Answer 5

Aid
Debt relief

Question 6

Positives and negatives of Aid

Answer 6

Reduces absolute poverty
Improvement in health and education improving human capital
Helps fix savings gap
Multiplier effects

Donor countries can impose conditions about how aid is used - might mean that money isnt use in optimal way to encourage economic growth
Aid can be misused by corrupt governments

Question 7

Positives and negatives of debt relief

Answer 7

Frees up money for improving infrastructure and public services
More incline to participate global trade, benefitting global economy

Risk of moral hazard and dependency culture
Might be a way for donor countries to secure influence in recipient country