development economics Flashcards
hows does education affect development
Higher Productivity:
- Education equips individuals with the skills and knowledge needed to work more efficiently and innovate.
- With a better-educated workforce, firms can adopt advanced production methods and improve output per worker.
- This raises GDP, fosters economic growth, and contributes to overall development.
Higher Jobs, Incomes, and Choice:
- Education increases employability and enables workers to access better-paying jobs.
- A skilled workforce is more adaptable to shifting market demands, creating new job opportunities and expanding industries.
- This reduces poverty, raises living standards, and allows individuals to make more diverse life choices.
Achieving Gender Equality:
- Education helps close the gender gap by providing equal opportunities for women and men to participate in the economy.
- Educating women improves family welfare, boosts workforce participation, and reduces income inequality.
- Societies benefit from a more inclusive and balanced economic development process.
Health Benefits:
- Educated individuals are more likely to make informed health decisions and access healthcare services.
- Improved education leads to lower infant mortality, reduced disease prevalence, and longer life expectancy.
- A healthier population is more productive and contributes positively to economic and social development.
Advancement of Technology:
- Education fosters innovation by developing scientists, engineers, and researchers who drive technological progress.
- Access to higher education and training in STEM fields accelerates the development and adoption of cutting-edge technologies.
- This enhances productivity, creates new industries, and positions countries to compete in a globalized economy.
ev points for education and development
Funding Challenges:
- The effectiveness of education in driving development depends heavily on the availability and allocation of funding.
- Developing countries may struggle to finance universal education, leading to disparities in access and quality between rural and urban areas.
- Without adequate resources, the benefits of education may not materialize, perpetuating inequalities and slowing development.
Underlying Structural Problems:
- Addressing education alone may not resolve broader structural issues that hinder development, such as poor governance or lack of infrastructure.
- Even with access to education, barriers like weak job markets, corruption, and inadequate healthcare systems can limit its impact on economic growth and social mobility.
- Development efforts must be holistic, addressing systemic issues alongside educational improvements to achieve meaningful progress.
Quality vs. Quantity of Education:
- Expanding access to education may not guarantee development if the quality of education is subpar.
- Without trained teachers, relevant curriculums, and adequate learning materials, students may not acquire the skills necessary for meaningful contributions to the economy.
- Investments should focus on improving both access and quality to maximize the developmental impact.
Mismatch Between Skills and Job Market Needs:
- Education systems must align with labour market demands to ensure productive employment for graduates.
- If education systems focus on outdated or irrelevant skills, it could lead to underemployment and frustration among educated individuals.
- Policymakers must integrate vocational training and market analysis into educational reforms
how does healthcare increase development
Increased Productivity:
- A healthy population leads to higher productivity levels.
- Improved healthcare reduces absenteeism and ensures that workers are physically and mentally fit to contribute to economic activities.
- This raises output, increases incomes, and promotes long-term economic growth, driving overall development.
Job Creation in the Healthcare Sector:
- Investments in healthcare generate employment opportunities in hospitals, clinics, and pharmaceutical industries.
- As the healthcare sector grows, it creates jobs ranging from medical professionals to administrative staff, contributing to economic growth and reducing unemployment.
- This improves income levels and boosts aggregate demand, further driving development.
Improved Standard of Living and Happiness:
- Better healthcare enhances overall well-being and life expectancy, which are core indicators of development.
- When citizens have access to quality healthcare, they enjoy a higher quality of life, with reduced mortality rates and improved mental health.
- This fosters a happier, more stable society that can actively contribute to economic and social progress.
Sanitation and Clean Drinking Water:
- Access to clean water and sanitation reduces the prevalence of waterborne diseases, improving public health.
- Healthy communities experience fewer outbreaks of illnesses, leading to lower healthcare costs and improved child mortality rates.
- This creates a more resilient and productive workforce, which is vital for sustained economic growth and human development.
Breaking the Poverty Cycle:
- Improved healthcare helps break the cycle of poverty by reducing the financial burden of medical expenses.
- Households with access to affordable healthcare spend less on treatments, allowing them to invest in education, nutrition, and other essential needs.
- This creates a multiplier effect, fostering economic mobility and long-term development
ev points for healthcare and development
Price of Healthcare Services:
- High healthcare costs can limit access for low-income households, particularly in developing countries.
- If healthcare services are unaffordable, a significant portion of the population will remain untreated, reducing productivity and perpetuating poverty.
- This highlights the importance of subsidized healthcare or universal healthcare models to ensure equitable access and support development.
Funding Challenges:
- Insufficient public funding for healthcare can undermine its effectiveness, especially in low-income economies.
- If governments lack resources to invest in hospitals, equipment, or trained professionals, healthcare systems may fail to meet the population’s needs, leading to poor health outcomes.
- Development is stunted as both productivity and life expectancy remain low without adequate investment in healthcare infrastructure.
Dependency on External Aid:
- Many developing countries rely on foreign aid to fund healthcare systems, which can be unsustainable.
- If aid is withdrawn or delayed, healthcare services may collapse, creating gaps in public health delivery.
- This dependency highlights the need for governments to prioritize domestic revenue generation and efficient spending to reduce reliance on volatile external funding.
Quality vs. Affordability Trade-off:
- Balancing affordable healthcare with maintaining quality services can be a challenge.
- Subsidizing healthcare may lead to budgetary pressures, while underfunding risks reducing the quality of care, making the system inefficient.
- A lack of quality healthcare reduces its developmental impact, as low-quality care may not effectively address health issues or improve productivity.
Opportunity Cost of Healthcare Funding:
- Large-scale healthcare spending may divert funds from other critical areas, such as education or infrastructure.
- Governments face trade-offs when allocating budgets, and over-prioritizing healthcare may leave other sectors underfunded, limiting broader development.
- Sustainable development requires a balanced approach to funding healthcare without neglecting other crucial drivers of growth.
factors that affect development: infrastructure
Access to Markets
- Improved infrastructure, such as roads, ports, and telecommunications, enhances access to markets for businesses and consumers.
- With better transport links, producers can reduce distribution costs, expand their customer base, and integrate into global supply chains.
- This boosts productivity and trade, increasing GDP and fostering development.
Access to Schools and Hospitals
- Infrastructure, such as roads and public transport, enables better access to essential services like education and healthcare.
- Easier access allows students to attend schools and patients to visit hospitals, improving literacy, skill development, and health outcomes.
- This enhances human capital, which is a critical driver of economic growth and social well-being.
Attracting Foreign Direct Investment (FDI)
- Well-developed infrastructure attracts FDI by reducing operational and logistical costs for businesses.
- A reliable energy supply, efficient transport networks, and modern communication systems create a favourable business environment for multinational corporations.
- Increased FDI contributes to job creation, technology transfer, and knowledge sharing, accelerating development.
Reducing Regional Inequalities
- Infrastructure development in remote or rural areas helps bridge the gap between urban and rural regions.
- By improving connectivity and access, rural communities can participate in broader economic activities, increasing their incomes and reducing poverty.
- This promotes inclusive development and reduces regional disparities.
Enhancing Productivity and Efficiency
- Reliable infrastructure, such as electricity grids and broadband internet, enhances productivity and supports innovation.
- Firms with access to consistent power and fast communication can operate efficiently, adopt new technologies, and compete globally.
- This drives long-term economic growth, making development more sustainable
evaluation points for infrastructure and development
Funding Challenges:
- Developing infrastructure requires significant capital investment, which may strain government budgets or increase national debt.
Corruption and Mismanagement:
- Poor governance can lead to inefficient allocation of resources, with funds for infrastructure projects being misused or wasted.
Maintenance Costs:
Infrastructure requires ongoing maintenance, and failing to budget for these costs can lead to deteriorating systems that hinder rather than support development.
Environmental Impact:
- Large-scale infrastructure projects, such as dams or highways, can have adverse environmental effects, displacing communities or damaging ecosystems.
Opportunity Cost:
- Focusing heavily on infrastructure might divert funds from other critical areas, such as healthcare or education, limiting balanced development.
taxes and development
- Taxation provides governments with the fiscal dividend needed to fund public services like education, healthcare, and infrastructure.
- By collecting taxes effectively, governments can redistribute wealth and invest in essential services, improving human capital and long-term development.
- This supports economic growth and reduces poverty, contributing to more equitable and sustainable development.
Evaluation:
- Corruption may result in misuse or misallocation of tax revenue, reducing its developmental impact.
- Tax exemptions for corporations and the wealthy can erode the tax base and perpetuate inequality.
- Low levels of corporate activity and incentives to evade taxes can limit revenue collection, especially in developing economies.
- Informal markets dominate in many developing countries, making it difficult to enforce taxation.
WTO trade agreements can restrict countries’ ability to impose tariffs, limiting tax revenue from trade.
Gender equality and development
- Empowering women has significant benefits for children’s health, education, and overall economic well-being.
- Women who have access to education and employment opportunities are more likely to invest in their families, leading to better health and education outcomes for their children.
- Increased participation of women in the economy raises household incomes and improves social outcomes, boosting economic growth and reducing poverty.
EV:
- Social and cultural barriers may limit the effectiveness of policies aimed at women empowerment.
- Unequal access to credit or property rights can hinder women’s ability to achieve economic independence.
what does the HDI(human development index) measure
- life expectancy
- knowledge(adult literacy)
- living standards, using gdp and ppp
- 0 - 0.49 = low development
- 0.5 - 0.69 = medium development
- 0.7 - 0.79 - high development
- > 0.8 = very high development
why is hdi a good measure of development
- Broad and Comprehensive Measure
- The HDI incorporates multiple dimensions of development, including GDP per capita, life expectancy, and education levels.
- By going beyond just economic performance, it provides a more balanced view of societal progress.
- This ensures development is measured holistically, capturing improvements in living standards, health, and education. - Focus on Development Outcomes
- HDI emphasizes critical development outcomes, such as life expectancy and education, rather than inputs like spending levels.
- This approach encourages countries to focus on delivering tangible benefits to their populations.
- Governments are motivated to implement policies that directly improve the quality of life for their citizens. - Tracks Progress Over Time
- HDI allows for the measurement of progress in human development over time.
- Countries can assess the impact of their policies by observing improvements or declines in HDI components.
- This makes HDI a valuable tool for accountability and long-term planning, fostering continuous improvements in development. - Highlights Countries with Low Development
- HDI draws attention to countries with low development levels, encouraging international aid and support.
- The ranking system identifies the nations most in need of assistance, ensuring resources are targeted effectively.
- This fosters global cooperation and aligns aid efforts to address disparities in development, promoting equity.
disadvantages of hdi
- Does Not Address Income Redistribution
- HDI focuses on average income (GDP per capita) but does not account for income inequality or redistribution.
- A country with a high HDI may still have significant income inequality, leaving large sections of the population in poverty.
- This limits HDI’s ability to reflect the true quality of life for all citizens, especially those at the bottom of the income scale. - Arbitrary Weighting and Resource Allocation
- The three components of HDI—income, education, and health—are given equal weight, which might not reflect their actual importance in a specific country.
- This arbitrary weighting can misrepresent priorities, as resource allocation should vary based on a country’s specific developmental needs.
- Policymakers might not address pressing issues, focusing instead on areas that artificially boost HDI rankings. - Lacks Consideration of Freedom and Choice
- HDI does not account for individual freedoms, democratic participation, or human rights.
- While economic and health metrics are vital, the lack of consideration for political freedom and societal choices diminishes its comprehensiveness.
- Countries with restricted freedoms but high HDI components may rank well, masking underlying societal issues. - Ignores Other Key Factors of Development
- HDI does not include crucial aspects like poverty rates, crime levels, environmental sustainability, or gender equality.
- Development is multi-dimensional, and excluding these factors can result in an incomplete representation of a country’s progress.
- This limits HDI’s usefulness in guiding policies to address issues such as social equity, security, and sustainable development.
how does political stability increase development
- Attracts Foreign Direct Investment (FDI)
- Political stability creates a predictable environment, reducing risks for foreign investors.
- Investors are more likely to establish businesses, industries, or infrastructure in countries with stable governance and reduced likelihood of conflict or policy reversals.
- This inflow of FDI boosts economic growth, creates jobs, and transfers technology, ultimately fostering long-term development. - Encourages International Aid (AID)
- Stable governments are better positioned to attract and effectively utilize foreign aid.
- Aid agencies and donor countries prefer politically stable nations, as funds are less likely to be lost to corruption or instability. Stable governance also ensures aid reaches its intended recipients, improving health, education, and infrastructure.
- Efficient use of aid directly improves human development indicators like life expectancy, literacy, and poverty reduction. - Facilitates Democracy and Good Governance
- Political stability fosters democratic institutions, promoting transparency, accountability, and inclusive decision-making.
- Stable democracies ensure policies are focused on long-term public welfare, such as investments in education, healthcare, and infrastructure. This also reduces the risk of social unrest or civil wars, which can derail development.
- Democracy encourages citizen participation, reduces inequality, and ensures more equitable resource distribution, all of which contribute to sustained development.
what is fdi
refers to purchase of an asset in another country
how does instability threaten development
- Loss of Infrastructure
- Political instability often leads to destruction or degradation of critical infrastructure such as roads, schools, hospitals, and utilities.
- Armed conflict, riots, or mismanagement during periods of instability can divert resources away from maintenance and development, while physical infrastructure is damaged or destroyed.
- A loss of infrastructure reduces access to essential services, hampers trade and economic activity, and lowers the quality of life, stalling or reversing development progress. - Reduced investment
- Instability discourages both domestic and foreign investment due to heightened risks and uncertainty.
- Investors are less likely to invest in regions where policies may change abruptly, corruption is rampant, or conflict threatens the safety of assets. This results in reduced capital inflow, business closures, and a weaker industrial base.
- The lack of investment slows economic growth, limits job creation, and reduces the government’s fiscal capacity to fund development projects
how does corruption threaten development
- Legal System Compromised
- Corruption undermines the legal system, weakening property rights and contract enforcement.
- When legal decisions can be influenced by bribes, citizens and businesses lose trust in the rule of law, reducing incentives to invest or innovate.
- This erodes the foundation for economic development and stalls progress in building strong institutions. - Inefficient Regulation
- Corruption leads to poorly designed or enforced regulations, prioritizing personal gains over public interest.
- Bureaucratic corruption can create unnecessary red tape to extract bribes, slowing down economic activity and reducing productivity.
- Resources are wasted, and markets become distorted, limiting overall economic efficiency and development outcomes. - Bribes Increase Costs
- Bribes increase the cost of production for firms and divert government investment away from critical sectors.
- Companies must allocate funds to pay bribes rather than invest in growth or innovation, while governments misallocate resources toward projects with greater bribe potential rather than societal benefit.
- This slows economic progress, reduces competitiveness, and worsens inequality by depriving public services of funding. - Lower Foreign Direct Investment (FDI)
- Corruption deters foreign investors, who seek transparent and stable business environments.
- Potential investors view corruption as a risk to profits and a sign of institutional weakness, leading them to avoid corrupt countries in favor of more stable markets.
- The lack of FDI limits technology transfer, industrial expansion, and job creation, stalling development. - Highest Bidder Wins
- Public projects and government contracts are awarded to those offering the highest bribe, not the most qualified firm.
- This results in poor-quality infrastructure and services, as unqualified contractors prioritize cutting costs to recover bribe expenses.
- Inefficiencies compound, and critical sectors like education, healthcare, and transport suffer, slowing long-term development.
