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
