Emerging & Developing Economies Flashcards
What is the difference between economic growth and economic development?
• Economic growth: An increase in real GDP (output of goods and services).
• Economic development: Improvements in quality of life, including health, education, and freedom.
What are the 5 common characteristics of less-developed economies (LDEs)?
- Low investment and savings – Fewer resources for capital investment.
- Corruption and weak institutions – Misallocation of resources.
- Lack of education – Low human capital reduces productivity.
- Limited access to finance – Difficulty in borrowing for businesses and households.
- Dependence on primary products – Prone to price volatility.
What are the 4 main measures of economic development?
• Human Development Index (HDI) (Health, Education, Income).
• GDP per capita (PPP adjusted) – Measures standard of living.
• Gini Coefficient – Measures income inequality.
• Access to basic services – Clean water, electricity, healthcare.
What are the 3 limitations of HDI as a measure of development?
❌ Ignores political freedom and human rights.
❌ Does not measure inequality within a country.
❌ Cannot capture short-term improvements.
What are the 5 key barriers to economic development?
- Corruption – Misuse of funds and inefficient resource allocation.
- Conflict and war – Destroys capital and discourages investment.
- Poor infrastructure – Limits business growth and trade.
- Savings gap – Insufficient domestic funds for investment.
- Healthcare issues – Low life expectancy and productivity.
What is the Dutch Disease?
• When a country’s currency appreciates due to natural resource exports, making other industries uncompetitive.
What are Paul Collier’s (2007) 4 development traps?
- Conflict trap – Civil wars and instability prevent growth.
- Natural resource trap – Dutch disease and corruption.
- Landlocked trap – No access to ports hinders trade.
- Bad governance trap – Corruption and poor policies.
What are 5 market-oriented strategies for development?
- Trade liberalisation – Reducing tariffs to boost exports.
- FDI promotion – Lower taxes and business incentives.
- Privatisation – More competition and efficiency.
- Floating exchange rates – Currency adjusts to market forces.
- Microfinance – Small loans to support entrepreneurs.
What are 5 interventionist strategies for development?
- Education investment – Builds human capital.
- Protectionism – Supports infant industries.
- Infrastructure spending – Roads, energy, and transport.
- Managed exchange rates – Prevents excessive volatility.
- Debt relief – Frees up resources for social spending.
What are the 5 different types of aid?
- Bilateral aid – From one government to another.
- Multilateral aid – From multiple countries via institutions (e.g. World Bank).
- Tied aid – Conditions attached (e.g. recipient must buy donor’s goods).
- Charitable aid – Non-governmental donations (e.g. WaterAid).
- Project aid – Specific investments (e.g. infrastructure).
What are the 4 criticisms of aid?
❌ Corruption – Aid funds may be misused.
❌ Dependency culture – Reduces incentives for self-sufficiency.
❌ Market distortions – Local firms struggle to compete.
❌ Tied aid restrictions – May benefit donors more than recipients.
What are the 4 role of international institutions in development?
- IMF – Stabilises currencies and provides emergency loans.
- World Bank – Funds development projects (e.g. infrastructure).
- WTO – Promotes free trade and resolves trade disputes.
- New Development Bank (BRICS) – Alternative funding for emerging economies.
What are fair trade and buffer stock schemes? (Also give a pro and con)
• Fair Trade – Guarantees minimum prices for producers, reducing income volatility.
• Buffer Stock Schemes – Government buys excess supply to stabilise commodity prices.
✅ Pros: Reduces poverty and market uncertainty.
❌ Cons: Requires funding and may distort competition.