Economic Growth & Development

Question 1

Human Development Index (HDI)

Answer 1

A measure of social development in an economy.
*Health - life expectancy or cases of disease.
*Education - mean / expected years of schooling.
*Standard of living - GNI per capita

Equality adjusted HDI - takes into consideration income and wealth inequality, gender inequality and human security.

However, HDI doesn’t take into consideration various social factors, such as crime rates, quality of the environment and political freedom.

Question 2

Social Progress Index (SPI)

Answer 2

A measure of social & environmental development in an economy beyond traditional economic indicators.
*Basic human needs eg. water, healthcare & shelter.
*Opportunity eg. freedom of speech & education
*Wellbeing eg. ecosystem sustainability & info access.

Allows us to compare the rate of social progress in comparison to the rate of economic growth.

Question 3

The Multi-Dimensional Poverty Index (MPI)

Answer 3

Looks at deprivations faced by the disadvantaged in society across 10 indicators, in health, education and standard of living. eg. dependency ratios

Question 4

Sources of growth / development

Answer 4

Natural factors eg. land
Human factors eg. training and skills
Physical capital eg. infrastructure

Question 5

Barriers to economic development

Answer 5

*Financial barriers eg. indebtedness discouraging FDI
*Political stances towards FDI & foreign asset ownership.
*Trade barriers eg. protectionism

Question 6

Market orientated strategies to achieve economic growth and development…

Answer 6

Promoting Foreign Direct Investment
Floating exchange rate system
Trade liberalisation - removing barriers

Question 7

Interventionist strategies to achieve economic growth and development…

Answer 7

Development of Human Capital
Managed exchange rates
Protectionism

Question 8

How does trade vs. aid benefit an economy

Answer 8

Trade encourages FDI and inward investment from firms, creating sustainable economic growth.

Whereas, aid stimulate consumption, and short run economic growth.

Question 9

Difference between absolute and relative poverty

Answer 9

Absolute poverty is not being able to afford basic needs of life.
Relative poverty is people who have below 60% of median incomes.