Economic Development and Growth Flashcards
chapter 25
what are LDCs?
least developed countries!
name the 5 stages of economic growth!
- traditional society
- transitional stage
- take-off
- drive to maturity
- high mass consumption
name the economist who examined the 5 stages of economic growth?
Walt Rostow
define economic development!
an increase in GNP per head of population, which is accompanied by a fundamental change in the structure of society.
define economic growth !
an increase in GNP per head of population, without any changes to the structure of society.
what are the limitations of Rostow’s Theory?
- not person-centred. should improve life of individuals in their existing environment. no mass movement into urban areas- industrial slums.
- may take a long time to trickle down to the average workers
- to general. not set down the detailed nature of the preconditions for growth.
what constitutes a ‘fundamental change’bin the structure of society ?
- URBANISATION, move from rural to urban areas
- EDUCATION, provision of mandatory primary education for all citizens
- POLITICAL STABILITY, move from an unstable and corrupt political structure to a democratic constitution
- MOVE AWAY FROM SUBSISTENCE INDUSTRY, less dependance on agriculture and move into the manufacturing sector
- IMPROVEMENT IN HEALTH CARE SYSTEMS
what is the human development index?
a summary composite index that measures a country’s average achievements in 3 basic aspects of human development : health, knowledge and income
…was introduced as an alternative to conventional measures of national development
name a few characteristics of LDCs !
- high rate of population growth
- famine
- uneven distribution of wealth, economic dualism
- overdependance on one crop
- poor living conditions/inadequate infrastructure
- low per capita incomes in LDCs
- poor levels of education/literacy
- political corruption /unstable institutions
how can governments in LDCs promote economic development?
- PROMOTE POPULATION CONTROL
encourage a reduction by educating population in family planning methods,…
2.IMPROVE INFRASTRUCTURE
capital projects, provision of clean water and proper sanitation, development of public housing, roads and power supply
- PROMOTE LAND/AGRICULTURAL REFORM
decrease emphasis one one crop, diversify production - EDUCATION/ LITERACY RATE
provide primary education, teach technical skills
How can LDCs improve output in their agricultural sector? (primary sector)
wealth from nature: farming, mining, forestry, fishing
- need for basic education
- use of fertilizers
- investment in irrigation schemes
How can LDCs improve output in their manufacturing sector ? (secondary sector)
- investment in education
- investment in infrastructure
- investment in small home industries (entreprise)
How can LDCs improve output in their tertiary sector? (supply of services)
- encourage ecotourism
- promote activity holidays
- need to upgrade airports, hotels, etc.
… this is very difficult until educational levels have improved!
how can governments of developed countries promote economic development in LDCs?
- assist foreign aid programs/ capital provision
- restructure their national debts
- improve trading opportunities
- encourage multinationals to set up firms in LDCs!
- assist with skills and technologies
- assist with peace measures and promote political stability
- become future market for their products
what are the benefits of economic development to LDCs?
- INCREASED STANDARD OF LIVING
- INCREASED EMPLOYMENT
- INCREASED RESOURCES AVAILABLE TO THE GOVERNMENT
- ALLEVIATION OF PROPERTY
- INVESTMENT IN RESEARCH AND DEVELOPMENT
Cost of economic development to LDCs ?!
- unfair distribution of benefit/ widening of poverty gap
- costs to environment
- traditional values/ loss of tadition
- welfare may not improve
- scarcer resources
steps towards resolving debt crisis…
- drop the dept (fresh start)
- reschedule the capital repayments (long term, let value decrease)
- lower the annual interest repayments (facilitate domestic needs)
- place a limit on interest repayments (encourages exports)
- barriers to prevent the flight of capital (many closed economies)
- dept swaps (to conserve habitats in danger - tropical forests)
what are the opportunities that the expansion of the EU presents to LDCs ?
- any trade agreements with the EU market open up much bigger markets, as barriers to entry to previous eastern bloc countries are eased.
- easier to find markets in Europe as negotiating barriers are removed.
- new sources for tourists for LDCs to target
- new sources for investment in LDCs will arise as new EU states raise their own standards of living
what are the challenges that the expansion of the EU presents to LDCs ?
- EU agricultural subsidies are now directed to several new EU states and will make it harder for LDCs to sell their produce in Europe
- LDCs may face stronger opposition for manufactured goods as the new EU countries benefit from investment by their EU neighbors
- EU expansion allows freer movement of labour within most EU countries , this will keep labour costs down in the EU. it might be harder for LDCs to gain a market foothold for their goods in the EU.
- new EU member states may obtain loans from their EU neighbors, thus limiting funds available to LDCs.
what constitutes a fundamental change in the structure of a society ?
- urbanisation
- education
- political stability
- move away from subsistence industry
- improvement in health care system
what are the advantages of economic growth?
+ better standard of living
+ more employment and opportunity
+ emigrants have the chance to return home
+ improved palace of payments
+ greater freedom and choice
+ higher government revenue to fund public services and improvements in infrastructure
+ reduced poverty, reduced dependance on outside help
what are the disadvantages of economic growth?
- damage to the environment
- benefits aren’t shared equally
- stressful, materialistic society
- sense of community can be lost
- opportunity cost of growth: current expenditure must be foregone in order to invest in future growth
- overcrowded urban areas, under inhabited rural areas
- Manet makes things possible, but it cannot buy happiness
what are less developed countries? LDCs?
one that exhibits the lowest indicators od socioeconomic development
rostow’s stages of economic development : STAGE 1 !
TRADITIONAL SOCIETY
- high dependance on subsistence agriculture
- primitive farming methods
- self sufficient, very little imports/exports
- low output per worker
- little or no manufacturing or services
- poor infrastructure
- country run by elite minority of landowners
- conservative culture distrustful of change
