Economic Development Flashcards
Define economic development (5)
improvement in economic welfare
improving living standards
reducing poverty
increasing range of economic + social choices
increasing freedom + self-esteem
Measures of economic development (2)
real GDP per head
HDI
Causes of differences in economic development (7)
income per head
savings - poor people cannot save + prevents investment
population growth - dependency ratio
education + healthcare - reduce quality of lives + productivity
sectors - tertiary sector
productivity
range of exports - sensitive to change in demand
Vicious circle of poverty for country (4)
low income
low saving
low investment
low productivity
How increases in living standards develop economy and benefit government (3)
greater income = more goods to be enjoyed
improved healthcare + education
distribution of income should be even
How reducing poverty leads to economic development and benefits government (3)
gives access to basic needs
improve health
more productive
How increasing range of economic + social choices benefit the government (3)
increased freedom
increased access to healthcare + education –> improve productivity
improve quality of life
Problems facing economies with low economic development (7)
high growth of population - dependency ratio
high international debt - countries pay loans rather than focusing on improving
lack of investment on human capital + capital goods - lowers productivity
emigration of skilled workers - brain drain
export of primary products
trade restrictions on products
unbalanced economies
How does the export of primary products cause problems for countries with low economic devlopment (3)
low economically developed countries tend to export primary products
price of primary products tends to fall
countries receive less for exports
Measures to promote economic development (4)
Import substitution
expose domestic firms to market forces
attract MNCs (multinational corporations)
borrowing from abroad
Define import substitution
protection of domestic industries against foreign competition by the government
How import substitution encourages economic development (3)
allows domestic industries to grow
replace imports with domestic products
may increase domestic output, raise employment, improve country’s balance of payments stability
Disadvantages with import substitution (2)
may raise prices + reduce choice in short term
domestic industries may become reliant on government and not improve their efficiency + competitiveness
How exposing domestic industries to market forces encourages economic development
firms will be forced to become efficient without gov. support
Disadvantages of exposing domestic industries to market forces in economic development
firms may be unable to compete with foreign firms - established for long time + have economies of scale
How MNCs encourage economic development (3)
increase employment
train + educate workers
bring in new technology
Disadvantages of MNCs to economic development (3)
may deplete non-renewable resources
may cause pollution
may put pressure on government to pursue policies which have negative effect on development
How loans encourage economic development (2)
can increase productivity
can increase living standards
Disadvantages of loans for economic development (2)
project may not be as successful as suspected –> debt
loan money can be used for unprofitable projects, military, corruption
Benefits of foreign aid
can promote development
Disadvantages of foreign aid (4)
can create economic + political dependency
postpone necessary reforms
bring in useless technology
may be used on non-profitable projects + corruption
Reasons for giving out foreign aid (3)
help people
political support
commercial advantage
Define bilateral aid
aid from one government to another
Define multilateral aid
aid from international organisations
How economic development in one country can promote economic development in another country (5)
country A economy grows –> will be able to provide more foreign aid to country B
population A income increases –> more people will buy imports from country B + more tourism to B
country A firms increase profits –> may set up units abroad
improved education in A –> more concerned on other economies –> pressure government to give more foreign aid
country B develops –> requires less aid, able to buy more products from A
