Factors Which Influence Growth And Development Flashcards
Demographic factors.
Sources of labour and how they are spread out or if their was a shortage or excess of labour due to population and immigration/emigration.
Poor access to credit and banking
Won’t attract FDI if their is a shortage in credit or little confidence in the economy
Their wouldn’t be access to that much credit and banking so start up loans for businesses would be very limited.
Education
A well educated population would be more expensive for those businesses looking for cheaper labour however they would be of better quality for those businesses which require better skills. E.g. pharmaceuticals are a major U.K export. 18.4 billion USD Worth of our total GDP 2019.
Primary product dependency
When a country relies on one product for its main source of economic growth and tax revenue.
Saudi Arabia are attempting to move away from their main export and reduce it to just 15% of total GDP in their vision 2030 plan.
Volatility of commodity prices
A commodity is a raw material used to turn into a product. If a country has little to no commodity goods then they must import (Marshall learner condition) So if commodity prices rise then they must import regard-less which will cut their growth potential e.g UK must import oil.
Absence of property rights
No incentive for workers to work and develop to country, Also very unattractive to Foreign Direct Investment.
Savings Gap
Harrod-Domar model, Which illustrates that its necessary to improve economic growth through increased investment, which will end up in increased savings, which results in more investment like a cycle.
Increased savings -> Increased investment -> Higher capital stock -> Higher economic growth. And then starts back at increased savings
Foreign Currency Gap
Persistent current account deficit causes uncertainty and make a country less attractive, especially if it has no foreign currency reserves to fall back on. China does, Estimated at 4 trillion USD
Evaluative point - The U.K. current account has been running a current account deficit for almost 20 years.
Capital flight
When assets or money rapidly flow out of a country due to an event of economic crisis E.g. Financial recession, Brexit however brexit was a political decision with economic consequences.
