Emerging and Developed Economies II

Question 1

What are 3 factors of the HDI

Answer 1

1.Life expectancy
2. Number of Years in Education
3.Income measured by GNI per capita

Question 2

Disadvantages of HDI

Answer 2

1. Takes no consideration of Income Distribution
   2.Other afactors aren’t taken int oaccount
   3.Health takes no notice of quality of life

Question 3

How does Primary Product dependency influence growth and development

Answer 3

1. Primary products inculde agriculture,mining etc. A large amount fo most developing country’s economic activity is based ony primary product, which cause issued for a number of reasons
2. Natural disasters can wipe out production of primary product leaving farmers with no income.

Question 4

What are 10 factors that influence Growth and Development

Answer 4

1. Primary Product dependency
2. Volatility of Commodity Prices
3. Savings gap
4. Foreign currency gap
5. Capital Flight
   6.Debt
   7.Access to Credit and Banking
   8.Infrastructure
   9.Education/skills
   10.Abscene of property rights

Question 5

What is the Savings Gap

Answer 5

The difference between actual savigns and the level of savings needed to achieve a higher growth rate.
Developing countries have lower incomes and thus they save less. leading to less money for banks to lend , reducing borrowing and thus reducing investment/consumption

Question 6

What is the Harrod-Domar model

Answer 6

The Harrod-Domar economic growth model stresses the importance of savings and investment as key determinants of growth
It suggests savings provide the funds which are borrowed for investment purposes and that growth rates depends on the level of savings and the productivity of investment.

Question 7

What is the foreign currency gap

Answer 7

When exports from a developing country are too low comapred to improts to finance the purchase of investmenet or other goods from overseas required for faster economic growth

Question 8

What is Capital Flight and when can it occur?

Answer 8

Large amounts of money are taken out of the country. ratehr than being left there for people to borrow and invest.
This can occur because of lack of confidence i nthe counrty’s stability, to hide from government authorities or simply for profit repatriation

Question 9

How does Infrastructutre affect the growth of developing countries?

Answer 9

Low levels of infrastructure make it hard for businesses to trade and set up within the country.

Question 10

How does the Abscene of property rights affect the growth of developing countries?

Answer 10

Property rights are where individuals are allowed to own and decide what happens to certain resources. A lack of rights mean that individuals/businesses cannot use the law to protect their assest ,leading to reduced investment.

Question 11

What are some Non-Economic factors that can affect growth and development?

Answer 11

1.Diseases
2.Poor climate and geographical terrain
3.Civil war
4. corruption

Question 12

Give 5 Strategies that can influence growth and development

Answer 12

1.Trade Liberalisation
2. Promotion of FDI
3.Removal of government subsidies
4.Floating exchange rate systems
5.Privatisation

Question 13

Give 5 interventionist strategies that can influence growth and development

Answer 13

1. Development of human capital
   2.Protectionism
   3.Managed exchange rates
   4.Infrastructure development
   5.Buffer stock schemes

Question 14

What are Buffer stock schemes and how can they infuence growth and development

Answer 14

Where the government imposes a maximum and minimum price for goods, buying up stocks when there is excess supply and selling them off when there is excess demand.
It’s used on commodites to stabilise prices and thus encourage investment it also prevents sharp falls in prices.