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
  • Increase in physical capital
  • Technological factors
  • 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.

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? (sustainable development)

A

Development that meets present needs without compromising future generations

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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

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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
  • 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)

25
What is purchasing power parity? (PPP)
An exchange rate that attempts to remove a distortion of values in market rates.
26
GDP - evaluation and analysis - Advantages
Data on GDP is easy to get for most countries.
27
GDP - evaluation and analysis - Disadvantages
GDP per capita does not consider how income is distributed but it is an average.
28
What’s the problem of using GDP (per capita) as a measure of welfare?
* Does not include informal economy * Difficult to measure the market value of public and capital goods * Includes military spending → does not contribute to welfare * Doesn’t take into consideration of negative externalities * Doesn’t measure quality of life
29
Single Indicators
* GDP/GNI per person (per capita) at PPP * Health and education indicators * Economic/social inequality indicators * Energy indicators * Environmental indicators
30
Health indicators
* Infant mortality rate * Life expectancy (at birth) * Calories per day * Protein per day * Population per doctor * Population per hospital bed
31
Education indicators
* 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
32
Economic/social inequality indicators
* Income and wealth distribution * Pay inequality * Asset ownership * Access to credit * Gini index
33
Energy indicators
* 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
34
Energy poverty
Lack of energy for adequate home temperature and living conditions.
35
Environmental indicators
* Ocean temperature * Level of greenhouse gas emission * Clean water availability
36
Composite indicators
* Human Development Index (HDI) * Gender Inequality Index (GII) * Inequality adjusted Human Development Index (IHDI) * Happy Planet Index
37
What are some limitations for HDI?
* No externalities are included (bad habit, polution) * No differences within countries * No gender value
38
HDI
measured using three different factors: * Health: Life expectancy at birth. * Education: Mean and expected years of schooling. * Living standard: GNI per capita (USD PPP).
39
Gender Inequality Index (GII)
40
Inequality adjusted Human Development Index (IHDI)
* All figures of HDI are adjusted downward with relation to Inequality. * If a country had perfect equality, IHDI = HDI.
41
Happy Planet Index
An index of well-being and environmental impact based on: * life satisfaction * life expectancy * ecological footprint