Global Perspectivd Flashcards
What is HDI
Measure of economic development
-education : mean years of schooling
-health : average life expectancy
-income : real GNI per capita
Benefit of HDI
-takes in 3 factors important for economic development
-relatively easy to calculate as government collect statistics
Disadvantage of HDI
Issues with figures : health doesnt include quality of life and education
-no consideration of equality of income
What is the Multidimensional Poverty Index (MPI)
-% of pop that is multidimensional poor
-education : yrs of schooling and education
-health : mortality rate and nutrition
-standard of living : safe drinking water, electricity etc.
Disadvantage of MPI
-data not available so can’t be calculated for most countries
-environment not included
What’s the Genuine Progress indicator?
-26 indicators grouped as economic,environmental and social
-Aims to look at economic sustainability
-shows developed countries have negative growth overtime due to impact on the environment
What does the economic category tell us in the GPI
-personal consumption, inequality and cost of unemployment
What does the environmental category tell us in the GPI
-cost of pollution, CO2 emission, depletion of non-renewable resources
What does the social category tell us in the GPI
-value of volunteer work
-cost of crime
-value of parenting and housework
What’s the ECONOMIC FACTORS that affect growth and development?
-primary product dependency
-volatility of commodity prices
-saving gap
-capital flight
-demographic factors
-debt
-access to credit and banking
-infrastructure
-education/skills
Why does PRIMARY PRODUCT DEPENDENT influence GROWTH
-primary products like ‘mining’ and ‘agriculture’ can be wiped out by natural disasters so farmers are left with no income.
-They are ‘non-renewable’ and have a low YED : Prebisch Singer hypothesis says : LR prices of primary goods declined in proportion to m goods
Saudi Arabia and oil!!
Why does VOLATILITY OF COMMODITY PRICES influence GROWTH
-they are demand and supply inelastic so a Change in demand or supply leads to huge fluctuations
-producers incomes rapidly change increasing poverty and difficult to long term plan investment
Why does SAVING GAP influence GROWTH
-developing countries have less income so save less
-saving rate in Africa is 17% of GDP
-Harrod-Domar model : saving provides investment which is needed to improve capital which is low (excess labour) In developing countries so need capital to grow
Why does CAPITAL FLIGHT influence GROWTH
-money taken out of the country
-lack credit for consumers and investment
-due to lack of confidence in the economic stability or repatriation
-caused Argentina economic crisis in 2001!
Why does DEBT influence GROWTH
-1980s : developing countries borrows loans from developed countries : pay high interest repayments
-less money to spend on services and may need to raise taxes
-limiting growth and development
-NIGERIA DEBT is 52% of GDP
What are some Non-economic factors that affect growth
-corruption :take bribes and high level of bureaucracy is costly and time consuming
-poor climate and geographical terrain
-DISEASES such as HIV/AIDS
-Civil Wars
Market oriented strategies : limit gov intervention
-Trade liberalisation
-promotion of FDI
-removal of gov subsidies
-floating exchange rate started
-micro finance scheme
-privatisation
Trade liberalisation
-export led growth
-remove trade barriers and resources allocated to comparative advantage
-used by Singapore and S.korea
Promotion of FDI
-there’s a transfer of knowledge and create jobs leading to multiplier
-help fill the saving gap
-however it’s repatriated of profits and exploit developing countries
-environmental damage
-India saw 50% increase in FDI after liberalising FDI
Removal of Gov subsidies
-aim to minimise poverty
-but their subsidies are poorly targeted : given to people who aren’t poor and in need but produce necessities
-Inefficiency
-corruption and criminality : sold abroad illegally for a profit
-
Micro finance schemes
-give poor permanent access to financial services : insurance, loans
-no collateral and grant access to more loans if repaid
-S.Africa failed as they gave loans to people who couldn’t repay due to high unemployment and spend on consumption and increased informal activity
Privatisation
-efficient by increasing competition
-improve gov finance
-monopoly
-corruption by selling to a friend
Interventionist strategies
-Development of human capital
-protectionism
-managed exchange rate system
-infrastructure development
-buffer stock system
I : Development of human capital
-higher productivity
-overcome primary product dependency by developing manufacturing sectir
I : protectionism
-allow domestic industry to grow : gain EOS and lower AC
-create jobs in the short run
-lose out on the benefits of C advantage and specialisation ??
I : managed exchange rate
-weak ER to increase exports : reduce poverty
-doesn’t work in practice, lead to the black market
I : Infrastructure development
-essential for development, reduce cost of transport and reduce prices and increase geographical mobility
-there would be free rider problem for private sector
-h may not have funds and are inefficient due to bribery and corruption
I : buffer stock system
-stabilises prices by buying and selling commodities at excess supply and excess demand due to volatility
-self-financing when sellling
-encourages investment to go away from primary product dependency
-huge start up and administration cost
What are some other growth and development strategies
-Industrialisation
-development of tourism
-Fair trade schemes
-Aid
-world bank
-International monetary fund
-NGOs
N : Industrialisation
Lewis model
: dual economy : agricultural and industrial
-workers attracted to urban area due to high wages, low productivity in agriculture means workers leaving has no impact on output
-workers who move have Higher incomes for saving for investment
What’s the issues with the Lewis model
-during harvesting labour is needed and no guaranteed those on higher incomes would save
-migration has caused urban poverty as industrial sector can’t provide jobs
And improvement in tech has worsened this
N : development of tourism
-provides fund for development
-its income elastic
-investment from TNC hotel and so gov would invest to attract
-jobs created as its low skilled and know the local area
-increase gov revenue
-industry is seasonal and low paid
N : fair trade schemes
-fair price and working condition, and protect environment
-price above market price : gives produces stability and raise their income and satisfaction
-child labour not used and sustainable production
-Sri Lanka study showed those on fair trade had high satisfaction and income
But didn’t believe their income was sufficient
- non fair trade producers see a fall in demand
N : Aid
-Egypt, Afghanistan and Vietnam receive most AID
-reduce absolute poverty such as emergency relief after disasters
-fill saving gap
-increase globalisation and trade due to less inequality
-h dependency culture
-h corruption : loans need to be repaid
N : International Monetary Fund
-ensure exchange rate system works well
-loans to help pay off international debt
-encourages countries to lower government spending and increase exports
-IMF provide advice to bring economic stability and raise living standards and help develop countries economic institutions
N : NGOs
-non-profit run independently
-direct assistance to counties within education, wells, healthcare
-pressure groups that encourage gov to use more pro-development strategies
-h : NGOs believe government are needed to fix the problem
-h : anti-capitalist as they blame WTO, World bank and IMF
