Economic Pursuits Flashcards
What is Economic Growth?
Economic growth consists of growth in the real GDP and implies an increase in the capacity of the economy to produce more goods and services
What is Economic Development?
Economic development consists of growth in the real per capita GNI and implies an increase in the capacity of the population to produce more goods and services
What is the difference between economic growth and economic development?
Economic growth: -focuses on economy's capacity -focuses on the increase in gdp -limited government intervention -measured in terms of real GDP Economic development: -focuses on the population capacity -focuses on the standards of living -justified government intervention -measured in terms of per capita GNI
What are the measures of development?
- Real per capita GNI
- Literacy levels
- Life expectancy
How where people grouped in terms of living standards?
- First world countries
- Second world countries
- Third world countries
What where first world countries?
- western countries in the northern hemisphere
- Highly developed and industriallised
- citizens enjoy high standards of living
What where second world countries?
- Former communist countries of eastern europe and china
- Generally poor countries
- Relatively low standards of living compared to first world countries
What where third world countries?
- mostly situated in the southern hemisphere
- known as developing countries
- population lives in poverty
What is the IMF?
It focuses on countries with balance of payments problems
How does the IMF group countries?
Into 3 groups:
- Industrialised countries
- Developing countries
- Transitional economies
What are Industrial countries?
- consist of high levels of GDP and per capita GNI
- They have large manufacturing and services sectors
What are developing countries?
- they have large primary sectors, low levels of GDP and per capita GNI
- A major portion of citizens exist near subsistant levels
What are transitional economies?
- previous communist countries of eastern europe, including Russia
- Middle income levels
- Manufacturing declining economies
How does the world bank measure countries?
- High income countries
- Upper middle income countries
- Lower middle income countries
- Low income countries
How does the UN distinguish groups of countries?
- Very high human development
- High human development
- Medium human development
- low human development
What is the hybrid measure?
It groups countries into:
- Developed countries
- Developing countries
- least developing countries
What are the objectives of development?
- to increase the availability and widen distribution of basic life-sustaining goods such food, shelter, health and protection
- to raise the standard of living, in addition to higher incomes, the provision of more jobs, better education and greater attention and human values
- To expand the range of economic and social choices available to individuals and nations
what are the common characteristics of developing countries?
- low standards of living
- low levels of productivity
- high population growth and dependency burdens
- high levels of unemployment
- dependancy on primary sector
- deficient infrastructure
What do low standards of living consist of?
- low per capita income
- low growth of per capita income
- unequal distribution of income
- poverty
- low life expectancy
- low levels of expectancy
what do low levels of productivity consist of?
- lower levels of productivity in developing countries than developed
- absence of factor inputs
- few financial resources to build human capital
- poor nutrition restricts mental and physical work
How do high population and dependency burdens affect developing countries?
- 2011 there where 7 billion people as a result of population growth
- in developing countries birth rates are high and death rates decline because of the availability of medicine
- children under 15 are non productive and rely on support from labour force
How do high levels of unemployment affect developing countries?
- developing countries do not make good use of their labour force
- people are working less than they are capable of
- open unemployment
How does the dependence on the primary sector affect developing countries?
Agriculture:
people in developing countries live and work in rural areas with low productivity
Exports:
Primary sector goods are exported
How does deficient infrastructure affect developing countries?
- infrastructure consists of buildings, roads, hospitals etc
- infrastructure in developing countries is almost non existent
