Lesson 44-Factors influencing growth and development Flashcards
What is Primary Product Dependancy?
This is where countries at their early stages of development tend to export a narrower range of products
.Many developing countries have a high dependence on extracting and exporting primary commodities
What dangers occur with over-specialisation?
If a country specialises more in primary commodities, it increases the supply of these commodities, which coupled with price inelastic demand for these goods. causes their price and therefore revenue to significantly fall
What effect can high commodity prices have on a countries currency?
This could lead to currency appreciation
What are development scores and GDP growth like in countries rich in natural resources?
.Slow rates of GDP
.Poor development scores
Why are Labour intensive manufactured goods now significantly cheaper?
Due to Globalisation, technological advances and the exploration of economies of scale
Give 3 strategies for reducing primary product dependency and price volatility
.Better government
.Stabilisation fund/sovereign wealth fund
.High stocks of natural resources
.Buffer stock schemes
.Diversification
What can an increase in national savings lead to?
This can lead to an increase in investment, leads to a larger capital stock, an increase in GNI, Increase in incomes which then leads to more for households to save
Give three reasons of importance of capital investment for developing countries
.Injection of demand for capital growth industries
.Creates positive multiplier effect
.Increased capital stock can increase rural productivity and therefore per capita incomes rise in rural areas
.Investment in new machinery and factories supports economies of scale
.It can help achieve export led growth
What is a currency exchange gap and what countries suffer from it?
Developing countries suffer from it and it is when there is an imbalance between flows and outflows of currencies
Give two ways in which a currency exchange gap could occur
.A country is running a persistent current account deficit
.There is an outflow of capital from investors in money and capital markets
.There is a fall in the value of inflows of remittances from nationals living and working overseas
Define Capital flight
Capital flight is the uncertain and rapid movement of large sums of money leaving the country
Give a possible micro economic effect of an ageing population
.Changing patterns of consumer demand in markets will affect businesses in specific sectors
.Impact on government spending and tax revenues
.Impact on housing market
Give a possible macro economic effect of an ageing population
.Impact on the rate of growth and productivity and long term GDP growth
.Impact on businesses competitiveness if the median age continues to rise rapidly
.Increased demand for state funded health care including social care and a possible reduction in tax revenues
Give two opportunities which arise from rapid population growth
.A young and fast natural population growth can cause an expanding working population increasing LRAS
.Increases the size of domestic markets, encouraging economies of scale and increased capital investment from businesses
Give two risks or drawbacks from rapid population growth
.A large number of young people entering the job market creates challenges in providing sufficient jobs and preventing a large increase in youth unemployment
.Fast growing population holds back the annual growth of per capita incomes
.Rapid population growth puts strain on the demand for water and energy-plus it threatens biodiversity
.High rates of rural-urban migration can lead to problems associated with urban density such as crime, the spread of disease and wealth and income inequalities
