Economic Development Flashcards
What are the two approaches to economic development
- China (used its excessive supply of natural resources and inexpensive factory labor to fuel its economic development)
- India (focused on white-collar service sector instead of blue-collar manufacturing)
What is economic development
increase in the economic well-being, quality of life, and general welfare of a nation’s people
-> requires economic growth -> depends on gains in productivity -> increases through all forms of entrepreneurial activity and innovation
What is an advanced country (developed country)
a country that is highly industrialized and highly efficient and whose people enjoy a high quality of life
What is an emerging market (newly industrialized countries)
a country that has recently increased the portion of its national production and exports derived from industrial operations
What are developing countries (less-developed country)
a nation that has low-quality infrastructure and low personal incomes
-> characterized by a high degree of technological dualism
What are the popular indicators of economic development
GDP and GNP
Transactions that are not counted in either GDP or GNP
uncounted transactions
What is a shadow economy
all the economic activities that have market value but are not formally registered
What are the problems in growth
- GP doesn’t determine whether a nation’s economy is growing or shrinking (simply a single shot of the year’s economic output)
- the need to supplement this data with information on expected future economic performances
What are the problems of averages
- most urban areas tend to be more developed and have higher per capita income than rural areas
- regions near good harbors or other transportation center tend to be more economically developed than interior regions isolated by less efficient means of transportation
What are the 2 pitfalls of comparisons
- country comparisons using gross product figures can be misleading
- apply the concept of purchasing power parity
What is purchasing power
value of goods and services that can be purchased with one unit of a country’s currency
purchasing power parity (PPP)
Relative ability of two countries’ currencies to buy the same “basket” of goods in those two countries
What is the human development index (HDI)
measure of the extent to which a government equitably provides its people with a long and healthy life, an education, and a decent standard of living
