Global Perspectivd

Question 1

What is HDI

Answer 1

Measure of economic development
-education : mean years of schooling
-health : average life expectancy
-income : real GNI per capita

Question 2

Benefit of HDI

Answer 2

-takes in 3 factors important for economic development
-relatively easy to calculate as government collect statistics

Question 3

Disadvantage of HDI

Answer 3

Issues with figures : health doesnt include quality of life and education
-no consideration of equality of income

Question 4

What is the Multidimensional Poverty Index (MPI)

Answer 4

-% 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.

Question 5

Disadvantage of MPI

Answer 5

-data not available so can’t be calculated for most countries
-environment not included

Question 6

What’s the Genuine Progress indicator?

Answer 6

-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

Question 7

What does the economic category tell us in the GPI

Answer 7

-personal consumption, inequality and cost of unemployment

Question 8

What does the environmental category tell us in the GPI

Answer 8

-cost of pollution, CO2 emission, depletion of non-renewable resources

Question 9

What does the social category tell us in the GPI

Answer 9

-value of volunteer work
-cost of crime
-value of parenting and housework

Question 10

What’s the ECONOMIC FACTORS that affect growth and development?

Answer 10

-primary product dependency
-volatility of commodity prices
-saving gap
-capital flight
-demographic factors
-debt
-access to credit and banking
-infrastructure
-education/skills

Question 11

Why does PRIMARY PRODUCT DEPENDENT influence GROWTH

Answer 11

-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!!

Question 12

Why does VOLATILITY OF COMMODITY PRICES influence GROWTH

Answer 12

-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

Question 13

Why does SAVING GAP influence GROWTH

Answer 13

-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

Question 14

Why does CAPITAL FLIGHT influence GROWTH

Answer 14

-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!

Question 15

Why does DEBT influence GROWTH

Answer 15

-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

Question 16

What are some Non-economic factors that affect growth

Answer 16

-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

Question 17

Market oriented strategies : limit gov intervention

Answer 17

-Trade liberalisation
-promotion of FDI
-removal of gov subsidies
-floating exchange rate started
-micro finance scheme
-privatisation

Question 18

Trade liberalisation

Answer 18

-export led growth
-remove trade barriers and resources allocated to comparative advantage
-used by Singapore and S.korea

Question 19

Promotion of FDI

Answer 19

-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

Question 20

Removal of Gov subsidies

Answer 20

-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
-

Question 21

Micro finance schemes

Answer 21

-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

Question 22

Privatisation

Answer 22

-efficient by increasing competition
-improve gov finance
-monopoly
-corruption by selling to a friend

Question 23

Interventionist strategies

Answer 23

-Development of human capital
-protectionism
-managed exchange rate system
-infrastructure development
-buffer stock system

Question 24

I : Development of human capital

Answer 24

-higher productivity
-overcome primary product dependency by developing manufacturing sectir

Question 25

I : protectionism

Answer 25

-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 ??

Question 26

I : managed exchange rate

Answer 26

-weak ER to increase exports : reduce poverty
-doesn’t work in practice, lead to the black market

Question 27

I : Infrastructure development

Answer 27

-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

Question 28

I : buffer stock system

Answer 28

-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

Question 29

What are some other growth and development strategies

Answer 29

-Industrialisation
-development of tourism
-Fair trade schemes
-Aid
-world bank
-International monetary fund
-NGOs

Question 30

N : Industrialisation

Answer 30

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

Question 31

What’s the issues with the Lewis model

Answer 31

-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

Question 32

N : development of tourism

Answer 32

-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

Question 33

N : fair trade schemes

Answer 33

-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

Question 34

N : Aid

Answer 34

-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

Question 35

N : International Monetary Fund

Answer 35

-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

Question 36

N : NGOs

Answer 36

-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