Internat Trade- Growth And Development

Question 1

Econ development

Answer 1

Improvement in the qq of output of gs that leads to an imporvennt in living standards of the majority of teh pop and net increase econ welfare

Question 2

Why increasing gdp may not lead to econ development

Answer 2

May not be real
Inequality
Not fairly distributed
Depends what produced- defene rather rthan ocnsumer goods
Pop increase

Question 3

Sustainable econ development

Answer 3

Increase living standards and net incerease econ welafre that does not compromise on livingstadards fo futrue generations by depletion of non renewable reousrecs and reosourve degredation
Requires greater use renewable reousrce sand reneworuble sources of energy, protection of biodiversity and signif decline no biodegradable waste pollution and co2 emissons

Question 4

Sustained econ growtyh

Answer 4

Continuous increase gdp

Question 5

Econ development measured by

Answer 5

General improvenbt in livibg standards which reduces poverty and human suffereing
Access to resources such as food adequate healthy diet
Shelter to satisfy basic human needs
Access op human develipmet- education trianig and lisure persuists
Access decent healthcare
Sustainablity and regeneration , resource depletion falls

Question 6

Policies for growth

Answer 6

Neoclassical
Comp poilicy- decrease barriers entry to makrets, dereg, brak up monopolues, privatisation of nat industry
Creating more flexible lab makret- zeroo hour contracts, dereg, easy hire and fire workers
Increase incentives work save and invest- cut tax, wlefare reform, lower corp tax incresed porofit to invest

Keynsian
Policies incease investemnt infratsurtcure- direct subsidy or provision
Increase investment education and trainig- occupational mmobility

Question 7

Neoclasical growth theory

Answer 7

Econ growth largely determined by grotwh in lab productivity
Determined by investment in productive capciaty- firm spending on plant, machinery, comapny ect and tech development

Question 8

Limitation of neoclassical growth theory

Answer 8

Does not explain how technolgical develpment may be achieved- tech rand d innevoation but neoclasicla growth theroy does not expalin how rand d and innovation may be enocuraged to rpomote real econ growth
Although planned econ soviet bloc invest heavlity cappaity anf rd post war period- not necessarily lead to sort of econ system enjoyed by usa and oehr mized eocn of western euroep- in soviet bloc not free markets and comp incentives to encourage right source of investment and rd

Question 9

New growth theory

Answer 9

Or endegenosu gortwh theory
Policies to encourae technological innovation may promote real econ growth

Question 10

New growth theory policies

Answer 10

Profit seeking research- comp markte to give firms incentive sto carry out right sort of rd that leads to market products adn serves and invets in uni and eductaion to encourage as much since research as possible
Openness foreign ideas- policied enocurage international trade and lab migration
Accumulation of human capital education and training

Question 11

Positive externality or external econ provided by state that benefit private sector businesses

Answer 11

Investmet education and trainnig should yied externalities positive for business
Investmet in infratstucture too

Question 12

Main barrer to econ growth and development in less developed econ

Answer 12

War
Corruption and lhigh levels of crime
Poor gov and weak rule of law
Lack of contract law
Investment in infrasturcture lack
Lack investment human capitial
Capital flight
Protection proerty rights lacking
Climate change
Communal ownerhsip

Question 13

War inhibit econ gd

Answer 13

Destruction prodductive capciaty
Kills lab

Question 14

Corrupion and high levels crime barrier growth

Answer 14

Dishonest and illegla behavour undernibe econ growth
Bribery gov officials and police- misallocation of resources- india andmany partys africa
Means dverts scarce resource from mroe productive to less efificient uses
Lack of property nrights proetcted
Russia and italy see rleatively high levels corruption and organised crime
Large informal secort flaling tax rev

Question 15

Reduced tax rev hamper lt econ growth

Answer 15

Decrease gov spending
Education training
Infrastructure rd
Healthcare, high infant mortality rate

Question 16

Poor gov and weak rule of law- institional factors- barriers rgowth

Answer 16

Role of democracy- can public officials and legislatioors be voted out of office if make poor decision or pass lawst hat undemrine eocn develipment
Integrity or fariness of judicial system- enforce contract law portect property rights
Integrity civil service and public admin systems- willingness to corruption
Financial institutions such as bank and stock markets importannt to allowe businesse to gain access to finance (fund investment) and consumer acess credit- fund cnosumer spending[

Question 17

Lack of contract law barrier

Answer 17

Less well estabilshed in less develiped econ and ee where legal system and capitalism relatively under developed after year comm and central planning
Without enforce law of contractm firms may not honour contratcs and therefore not supply gs that paid for
If cant be certain constratc law enforcenebt less business activity fewer transactions and lower econ rowth
Local judges may be corrupt

Question 18

Investment in infrastructure- barriers to growth

Answer 18

Road rail networks, airport port water and sewage telecom network vital to encure business transation gs
Lack infratcture- africa asia s america even in brazil relatiely well developed
Infrastructure merit good- positive etxernality0 underused not porfit max, low mpb, underporvdied if left. To private sector
May be less investable as corrupt policians an dpublic officals and rulling leites may missapply public funds- sometimes throgh brutal suprresion of opp or media s seen in russia and zimbabwe to maintain power or syphon funds illegally out of country

Question 19

Lack investment human capital barrier to grotwh

Answer 19

Essentail to create a workfoce w wide variety of skills taht can collectively porudce the wide variety of gs that can raise living stadnards of pop
Educsation and traing- increase q q gs produce increasing gdp
Positicve correlation between investment education and growth dp
May increase qualaity of life- liesure read a book
Exclusion of women ie afghanisatn may decrease productive capicty sixe of workfroce less poetntial talent, icnrease life expectant, better jobs better paid

Question 20

Capital flight barrier econ growth

Answer 20

Major problem esp sub suharan affrica where ruling elites remove the profits they make from the country industry into foriegn bank accounts instead of reinvesting financial gains in infrasturcture or education
Capital flights increase since 2000a s increasing profts from explooitation of africas mineral resources
Undermine growth and development by siphning offf potential funds out of continent

Question 21

Protection of property righst lack barrier

Answer 21

Intellectual property- encourag einevsteors in physical capital (infrasturcture machienery cpmputer) and innovate in new products and services therfore promote econ growth
No incentives develop businesses and porduc gs if cant be guarenttedd upholding conrtacts
Patent law- enocurage rd technological progress and eocn growth

Question 22

Climate change barrier growth

Answer 22

Agriculture hammpered- lwoer productivity of land with desertification esp sub saharnan africa
Floording holland xtend higeht dyke- destroy productive capacity
Extreme weather

Question 23

Communal owership gd

Answer 23

Corruption encouraged and lack incentives leafs to technological and allocative inefficient yet state merit goods and eocn of scale does lead to rapid industrialisation
Central planning less effective with consumer goods watser resources
Eg taiwan and hk more sucessful than china with democracy and biritish legal sustem
Modern russia- supress opp and media, yet after collapse usr many resources transfer private sector oligarchs
Eg roman abramavich invetsl little welath into econ

Question 24

Polciies to promote econ growth and sustainable develompent in less developed econ

Answer 24

Peace
Good gov and rule of law
Prudent fisal and monetary policy to maintain stable ad
Supply side policies
Approporate microecon policies
Exchange controls to limit capital fligyyht
International trade
Foriegn aid

Question 25

Polcieis promote growth- supply side policies

Answer 25

Less developed eocn benefit from more interventionist supply side polcies to encourage investment in education trainng and infrastructure
Comp policy may help to encourage comp practisies yet krugman argue protectionsim for infant industries
Blance redistricbution of income and welath create incentives- high levles of inequality are incompatible with develpment and can suppress demand social mobility development of talennt essential econ growth
But high levels of tax in high income grops adn wea;thy may damage inceniyves and cause brain drain

Question 26

Appropriate microecon policies - promote growth

Answer 26

Reduce or correct variations market failres that econ growth can bring about
Tax and subsidies
Ie cigarettes alcohol but could lead to smmuggling
Carbon tax on burning foissl fuels and reinvetsment renewables

Question 27

Good gov and rule of law- polcies promite econ growth

Answer 27

Enforce conrtact law
Protect property rights
Minimise corruption to encourage creation of new businesses and entrepreneurship