Emerging And Devoloping Economies Flashcards

1
Q

HDI

A

A composite measure which is sued in the United Nations development report and which consists of three elements:
GDP per head, health (life expectancy) and education (years in school average)

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2
Q

Advantages of using HDI

A

Broader measure than GDP per capita
According to the UN programme, the three so essential contributors to development for people to lead a long health life, have access needed for decent living

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3
Q

Limitations of HDI

A

Too narrow, only takes into account three things
Only concerned with long term development outcomes
An average, so disguised disparities a inequalities within countries

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4
Q

Other indicators of development

A

Proportion of population with access to clean water,energy consumption per person, degree of inequality,mobile phones per thousand people etc.

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5
Q

Factors influencing growth and development (examples)

A

Education, infrastructure, debt, demographics, foreign currency gap, primary product dependency, absence of property rights etc.

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6
Q

Factors influencing growth and development: primary product dependency

A

Occurs in countries where the value of production in primary products accounts for a large proportion of GDP. Hard commodities (minerals) and soft commodities (agriculture)

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7
Q

Factors influencing growth and development: primary product dependency issues

A

Extreme price fluctuation, protectionism,finite supply (of hard commodities),fluctuation in producers revenue

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8
Q

Factors influencing growth and development: savings gap (Harrod Domar model)

A

Low income and output-> low savings -> low investment -> low capital accumulation -> low income and output
Suggest development limited

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9
Q

Factors influencing growth and development: savings gap (Harrod Domar model) limitations

A

Focus only physical capital and ignore human capital, assumes constant relationship between capital and income, savings gap can be filled (eg by FDI)

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10
Q

Factors influencing growth and development: foreign currency gap

A

Countries may have a shortage of foreign currency, which could be caused by- dependency on the export of primary products, dependency on imports of oil and manufactured goods, interest payments on debt to foreign countries

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11
Q

Factors influencing growth and development: demographic factors

A

In countries with greater population growth, GDP per head would decline, ageing population means smaller working population

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12
Q

Factors influencing growth and development: debt

A

Causes- dependency on primary product and falling terms of trade, borrowing money at times of low interest rates, loans taken to finance expenditure on military equipment, investment project etc.

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13
Q

Factors influencing growth and development: access to credit and banking

A

Important both for new entrepreneurs who need to borrow money to finance their start up expenses and for existing businesses which may need money to finance expansion and for cash flow reasons

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14
Q

Factors influencing growth and development: infrastructure

A

PhysicL and organisational structures and facilities which are required for the efficient operation of a society and its enterprises. If bad, it may deter domestic investment and FDI

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15
Q

Factors influencing growth and development: education and skills

A

If school enrolment ratio is low then the levels of literacy and numeracy are likely to be low, so productivity may be low and will act as a deterrent to FDI

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16
Q

Factors influencing growth and development: absence of property rights

A

The authority to determine how a resource is used, whether it’s owned by the gov, or individuals. Ownership rights

17
Q

Impact of non-economic factors in different countries: poor governance, instability and civil wars

A

If weak gov., unlikely resources will be allocated efficiently, gov. Failure may occur. If gov. Intervention, there may be welfare loss, civil war devastating effects on infrastructure etc,

18
Q

Impact of non-economic factors in different countries: corruption

A

Undesirable if it causes: inefficient allocation of resources,decrease FDI, capital flight, increase in cost of running a business there

19
Q

Market oriented strategies: trade liberalisation

A

Removal of trade barriers. Results in a increase in trade, maybe lower prices and consumer surplus, encourage FDI

20
Q

Market oriented strategies: promotion of FDI

A

Encourages by: trade liberalisation, deregulation of capital markets, tax incentives,measures to make cheaper to operate there

21
Q

Market oriented strategies: removal of government subsidies

A

Reduced so less incentive for firms to minimise costs

22
Q

Market oriented strategies: floating exchange rate system

A

Result in depreciation of exchange rate, goods and services more competitive abroad.

23
Q

Market oriented strategies: privatisation

A

More efficient than gov. Run

24
Q

Market oriented strategies: micro finance schemes

A

Provide poor with small loans to help them engage in productivity. However have high interest rates

25
Q

interventionist strategies: development of human capital

A

skills knowledge and talents of the workforce includes the idea there are investments of people

26
Q

interventionist strategies: protectionism

A

include tariffs, quotas and subsidies to domestic producers

27
Q

interventionist strategies: managed exchange rates

A

bank could engineer a depreciation of the country’s currency, so increasing competitiveness of its goods and services

28
Q

interventionist strategies: infrastructure development

A

tends to be expensive but is vital to a country’s economic development and prosperity. may be funded publicly, privately

29
Q

interventionist strategies: promoting joint ventures

A

enterprise undertaken by two or more firms which retain their distinct identity.
advantages include: reduction in costs and risks, less vulnerability to hostile actions id there is political instability
disadvantages: possible loss of control of tech and enterprise to the local partner, possibility of the partners having different strategic interests

30
Q

interventionist strategies: buffer stock schemes

A

designed to reduce price fluctuations.
key features of these schemes: a ceiling price (max price), floor price (min price), a buffer stock (storage and release of stock)

31
Q

interventionist strategies: industrialisation (Lewis model)

A

transfer of surplus labour from low productivity to higher productivity sectors,

32
Q

interventionist strategies: development of tourism

A

source of foreign exchange, investment by global companies, increased tax revenue. but, external costs, employment my be low paid and seasonal

33
Q

interventionist strategies: development of primary industry

A

some countries have achieved rapid rates of growth and development as a result development of their primary sectors.
this approach is appropriate if: demand for primary products is income elastic, country has comparative advantage in primary products, FDI is attracted

34
Q

interventionist strategies: fair trade schemes

A

the primary aim of fair trade schemes is to guarantee that producers receive a fair price for their products

advantages: producers receive a higher price, increased revenue allows quality to improve, producers protected from fluctuating prices
disadvantages: extra money may only be very mall, poorer or remote farmer unable to join, main proportion of the higher prices goes to retailers rather than producers

35
Q

interventionist strategies: aid

A

transfers of resources from one country to another to reduce absolute poverty and provide emergency relief.
types of aid: tied aid (one with conditions attached), bilateral aid (given directly by one country to another), multilateral aid (provided by countries through organisations).
but, can distort figures, corruption, interest may be needed to be paid, dependency culture may occur

36
Q

interventionist strategies: debt relief

A

IMF, world bank etc.
increases confidence, environmental gains.
but, corruption, moral hazard (country taking the risk wont be the one who bears the consequences),impact on financial institutions and their shareholders in developed countries

37
Q

international institutions: the World Bank

A

role changed in 1970 its role change to setting up agricultural reforms in developing countries, giving loans and providing expertise.
imposes structural agricultural programmes (SAP), which set conditions on which loans are given. aim to ensure that debtor countries don’t default on the repayments of debts.
SAPs are based on free market reforms. however, criticised as did little for worlds poor
following this, world bank now focus on poverty reduction strategies

38
Q

international institutions: IMF

A

189 members. when countries join its required to pay a quota which is broadly based on the relative size of the country in the world economy. in 2008, the IMF increased lending, and gave advice to countries.

39
Q

international institutions: NGOs

A

bought community based development to the forefront to promote growth and development