Emerging & Developing Economies Flashcards

1
Q

What is the difference between economic growth and economic development?

A

• Economic growth: An increase in real GDP (output of goods and services).
• Economic development: Improvements in quality of life, including health, education, and freedom.

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2
Q

What are the 5 common characteristics of less-developed economies (LDEs)?

A
  1. Low investment and savings – Fewer resources for capital investment.
  2. Corruption and weak institutions – Misallocation of resources.
  3. Lack of education – Low human capital reduces productivity.
  4. Limited access to finance – Difficulty in borrowing for businesses and households.
  5. Dependence on primary products – Prone to price volatility.
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3
Q

What are the 4 main measures of economic development?

A

• 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.

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4
Q

What are the 3 limitations of HDI as a measure of development?

A

❌ Ignores political freedom and human rights.
❌ Does not measure inequality within a country.
❌ Cannot capture short-term improvements.

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5
Q

What are the 5 key barriers to economic development?

A
  1. Corruption – Misuse of funds and inefficient resource allocation.
  2. Conflict and war – Destroys capital and discourages investment.
  3. Poor infrastructure – Limits business growth and trade.
  4. Savings gap – Insufficient domestic funds for investment.
  5. Healthcare issues – Low life expectancy and productivity.
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6
Q

What is the Dutch Disease?

A

• When a country’s currency appreciates due to natural resource exports, making other industries uncompetitive.

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7
Q

What are Paul Collier’s (2007) 4 development traps?

A
  1. Conflict trap – Civil wars and instability prevent growth.
  2. Natural resource trap – Dutch disease and corruption.
  3. Landlocked trap – No access to ports hinders trade.
  4. Bad governance trap – Corruption and poor policies.
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8
Q

What are 5 market-oriented strategies for development?

A
  1. Trade liberalisation – Reducing tariffs to boost exports.
  2. FDI promotion – Lower taxes and business incentives.
  3. Privatisation – More competition and efficiency.
  4. Floating exchange rates – Currency adjusts to market forces.
  5. Microfinance – Small loans to support entrepreneurs.
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9
Q

What are 5 interventionist strategies for development?

A
  1. Education investment – Builds human capital.
  2. Protectionism – Supports infant industries.
  3. Infrastructure spending – Roads, energy, and transport.
  4. Managed exchange rates – Prevents excessive volatility.
  5. Debt relief – Frees up resources for social spending.
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10
Q

What are the 5 different types of aid?

A
  1. Bilateral aid – From one government to another.
  2. Multilateral aid – From multiple countries via institutions (e.g. World Bank).
  3. Tied aid – Conditions attached (e.g. recipient must buy donor’s goods).
  4. Charitable aid – Non-governmental donations (e.g. WaterAid).
  5. Project aid – Specific investments (e.g. infrastructure).
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11
Q

What are the 4 criticisms of aid?

A

❌ 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.

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12
Q

What are the 4 role of international institutions in development?

A
  1. IMF – Stabilises currencies and provides emergency loans.
  2. World Bank – Funds development projects (e.g. infrastructure).
  3. WTO – Promotes free trade and resolves trade disputes.
  4. New Development Bank (BRICS) – Alternative funding for emerging economies.
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13
Q

What are fair trade and buffer stock schemes? (Also give a pro and con)

A

• 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.

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