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Economics (Tina) > Introduction to Development > Flashcards

Introduction to Development Flashcards

1
Q

Economic Growth

A

Increase in real output over time, measured as a % increase of GDP

GDP = total value of all goods and services produced by a country in a given amount of time

IBO = multidimensional nature

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2
Q

Economic Development

A

Improved welfare and quality of life through:

  • Freedom
  • Reduced poverty
  • Better living standards
  • Education
  • Healthcare
  • Equality
  • Employment
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3
Q

Sources of Economic Growth

A
  • Natural Factors
  • Increase in human capital - human (education, etc…)
  • Increase in physical capital - infrastructure, banking system, FOP
  • Technological factors - development and use of new technologies appropriate to the conditions
  • Institutional changes
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4
Q

What is capital?

A
  • Things used to make other things
  • Gives its owner value or advantage

e.g. factory and its equipment

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5
Q

Capital goods

A

Goods that are used to produce something else

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6
Q

Human Capital

A

People, their skills, their productive capacity (the knowledge, skills, and health that people invest in and accumulate throughout their lives)

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7
Q

Physical Capital

A

factories, machines, vehicles, roads, etc (assets, such as building, machinery, and vehicles, which are owned and employed by an organisation)

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8
Q

Financial Capital

A

Money, credit, (saved-up financial wealth, especially that used in order to start or maintain a business)

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9
Q

What is the relationship between Economic Growth and Development?

A

Limited economic development is possible without growth, but long-term development typically requires economic growth.

Note: under certain circumstances economic growth may not lead to economic development.

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10
Q

Sources of Economic Development

A

When does Economic Growth lead to Economic Development?

  • Higher incomes
  • Improved economic indicators of welfare
  • Higher government revenues
  • Removal of inequality
  • Fewer externalities
  • Sustainability
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11
Q

Using appropriate diagrams, explain how it is possible to have both economic growth and development and how it is possible to have just economic growth without development.

A

PPC:

  • PPC shifting outwards –> Economic growth –> Economic growth increases potential, economics development improves output quality

LRAS

AD/AS

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12
Q

What is sustainability?

A

Development that meets present needs without compromising future generations

Sustainability:

environmental, socio-political and economic

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13
Q

Uneconomic Growth

A

Production increases at a greater cost to resources and well-being than the value created

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14
Q

Relationship between sustainability and poverty (HL)

A
  • Poor people need to rely on natural resources (wood, water) → harm the environment (e.g. cutting down trees) → unsustainable → resources decrease → people are stuck in poverty due to lack of resources
  • Poor people can’t own good land → bad land → doesn’t grow much food → can’t make enough from the land to improve their lives
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15
Q

LDC

A

LDC - Least Developed Country

A country that is still in the process of development and:

  • In poverty = has not yet reached an arbitrary per capita living standard (GNI is less than US$1085 per year in 2021)
  • Suffers from human resource weakness (nutrition, health, literacy)
  • Suffers from economic vulnerability (unstable agriculture or exports, economic importance of non-traditional activities, natural disasters, etc)
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16
Q

LEDC

A

LEDC - Lesser Economically Developed Countries

A country with a less developed industrial base and low HDI

17
Q

Low/middle/high income

A
  • Low income countries (LIC) = GNI per capita = US$1,085 or less.
  • Lower middle income countries (LMIC) = GNI per capita = US$1,086 - US$4,255.
  • Upper middle income countries (UMIC) = GNI per capita = US$4,256 - US$13,205.
  • High income countries (HIC) = GNI per capita > US$13,206.
18
Q

Common characteristics of LICs/LEDCs

A
  • Low standard of living: income inequality, poor health, inadequate education, low incomes, savings, and investment.
  • Low productivity (output per person).
  • High dependency burdens: rapid population growth and size. Dependency ratio = (% under 15 + % over 65) / % aged 16-64.
  • High unemployment/underemployment.
  • Reliance on primary products (agriculture).
  • Imperfect markets: lacking banks, infrastructure, legal systems, and accurate information; large informal sectors.
  • Dependence and vulnerability in international relations.
  • Low investment, savings, poor capital-labour ratio, and underdeveloped financial infrastructure.
19
Q

NICs

A

New Industrialised Countries (e.g. China, Brazil, India)

20
Q

Transitional economies

A

From central planning to market system (e.g. Vietnam, China)

21
Q

BRICS

A

(Brazil, Russia, India, China, South Africa) - very strong middle income countries, countries with strong economies

22
Q

EAGLEs

A

Emerging and growth-led economies - they are expected to lead global growth over the coming decade.

23
Q

Informal sector

A
  • Unrecorded or illegal economic activity not taxed by the government
  • Often referred to as parallel markets, shadow economy, or clandestine markets
24
Q

Sustainable Development Goals (SDGs)

A
25
Q

The three pillars of sustainability

A
  • Social Sustainability
  • Environmental Sustainability
  • Economic Stability
26
Q

Social Sustainability

A
  • Equitable opportunities
  • Support processes
  • Basic needs met - good healthcare, employment opportunities, housing, education
  • All members of community have a voice
  • Promotion of diversity
27
Q

Environmental Sustainability

A
  • Renewable energy
  • Challenge of global warming and climate change
  • Healthy ecosystems
  • Laws to protect common access resources
28
Q

Economic Sustainability

A
  • Attracting domestic and foreign investment
  • Efficiency and productivity of local communities
  • Firms are economically and environmentally
    sustainable
  • Stability - e.g. stable incomes
29
Q

What is purchasing power parity? (PPP)

A
30
Q

GDP - evaluation and analysis - Advantages

A

Data on GDP is easy to get for most countries.

31
Q

GDP - evaluation and analysis - Disadvantages

A

GDP per capita does not consider how income is distributed but it is an average.

32
Q

What’s the problem of using GDP (per capita) as a measure of welfare? Is it time to end our fixation with GDP and growth?

A
33
Q

Health indicators

A
  • Infant mortality rate
  • Life expectancy (at birth)
  • Calories per day
  • Protein per day
  • Population per doctor
  • Population per hospital bed
34
Q

Education indicators

A
  • Literacy rate
  • Expected years of schooling
  • Mean years of schooling
  • Primary education enrollment
  • Secondary and tertiary enrollment
  • % Children out of school
  • Spending on education as % GDP
  • Years of schooling for teachers
35
Q

Economic/social inequality indicators

A
  • Income and wealth distribution
  • Pay inequality
  • Asset ownership
  • Access to credit
  • Gini index
36
Q

Energy indicators

A
  • Energy poverty
  • Access to electricity
  • Ability to maintain a home of adequate temperature
  • Share of households/population without electricity
  • Energy use per capita
  • Renewable energy share in energy and electricity
37
Q

Energy poverty

A

Inability to maintain adequate home temperature or essential energy services for decent living conditions.

Economics (Tina) (21 decks)

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