Emerging and developing economies Flashcards
1
Q
3 elements of HDI
A
- GDP per head
- Health
- Education
It tracks progress made by countries in these 3 areas to measure living standards (used in UN development report)
2
Q
Advantages of HDI (2)
A
- Broader measure than GDP per capita
- UN- 3 essential contributors to development are for people to lead a long and healthy life, acquire knowledge and have access to resources needed for decent standard of living
3
Q
Limitations of HDI (3)
A
- Too narrow as only comprises 3 aspects of development
- Only concerned with long term development outcomes
- Average measure and so disguises disparities and inequalities within nations
4
Q
Other indicators of development (8)
A
- Access to clean water
- Male population employed in farming
- Energy consumption per person
- Population with internet access
- Mobile phones/1000
- Degree to which people are entitled to civil rights
- Degree of democracy
- Degree of inequality
5
Q
Factors influencing growth and development (11)
A
- Non economic factors
- Primary product dependency
- Volatility of commodity prices
- Savings gap
- Foreign currency gap
- Demographic factors
- Debt
- Access to credit and banking
- Infrastructure
- Education/skills
- Absence of property rights
6
Q
Two types of primary products
A
Hard commodities and soft commodities
7
Q
Issues for countries depending on primary products (8)
A
- Extreme price fluctuations
- Fluctuations in producers’ revenue resulting from price fluctuations
- Fluctuations in FE earnings
- Protectionism
- Shortages of supplies for domestic consumption
- Finite supplies of hard commodities
- Appreciation of the currency
- Falling terms of trade
8
Q
Prebisch-Singer hypothesis (4)
A
- Demand for PP tends to be income inelastic but demand for MG is income inelastic
- As real incomes rise the demand for MG increase at a faster rate than the demand for PP
- Prices of MG will rise more quickly than prices of PP
- Terms of trade of developing countries will fall relative to those of developed countries
9
Q
Primary product dependency
A
In countries where value of production of primary products accounts for large proportion of GDP
10
Q
Criticisms of P-S hypothesis (3)
A
- Developing country may have a comparative advantage on PP
- Real price of PP may increase over time with rising world incomes and population
- FDI has increased a lot in recent years in countries dependent on PP
11
Q
Harrod-Domar model
A
Illustrates problem of how countries with low GDP per head will have a low savings ratio
12
Q
Harrod-Domar criticisms (3)
A
- Focuses on physical capital and ignores significance of human capital
- Assumes constant relationship between capital and output
- Savings gap may be filled by means other than domestic savings e.g. FDI
13
Q
Causes of foreign currency gap (4)
A
- Dependency on export of primary products
- Dependency on imports of oil and MG
- Interest payments on debt to foreign countries
- Capital flight (assets or money taken out of country)
14
Q
Demographic factors (2)
A
- Malthus predicted famine as food production in geometric but population is arithmetic progression. Where population growth greater than GDP growth –> GDP per head will fall
- Ageing population means smaller workforce
15
Q
Debt causes (6)
A
- Dependency on PP and falling terms of trade
- Developing countries borrowing money at times of low interest rates but struggling to service debt
- Having to borrow to pay for imports when oil price increases
- Loans to finance prestigious investment projects
- Depreciation in value of currencies of developing countries which increases burden of debt
- Loans to finance expenditure on military
