Measure of Development Flashcards
what is economic growth
increasing the size of GDP
what is economic development
the overall improvement in a country’s economic health, including growth in income, employment, and living standards, often driven by investments, policies
what is national income data and some examples of it
measure of economic development such as real gdp per capita or real gni per capita
adv of using GDP/GNI PER CAPITA
better indication of living standards
and compare figures between countries
helps us make use of the purchasing power parity eg ($1 can buy more in a less developed country than developed one)
disadv of using GNI/GDP per capita
doesnt tell u quality of life factors
ignores economic welfare brought by the hidden economy (economic activity not recorded by gov statistics)
What is the GPI (Genuine progress indicator)
indicator that tries to give us fuller effects of growth than GDP uses GDP but also takes into account negative effects of growth
adv of GPI
help policies aimed at increasing overall welfare
disadv of GPI
difficult to put a value on the cost of things like pollution so figures can be seen as subjective
what is the HDI
Human development index which attempts to describves ppls welfare abd a countries economic development through various factors
what factors do the HDI look at
Education
Health
Standard of living
How is education measured
years of schooling
How is health measured
Life expectancy
How is Standard of living measured
real GNI per capita adjusted for PPP
Evaluate HDI
used to rank countries from most to least developed (from 0-1) which 1 being the most devlped and 0 beiing least developed
However countries can acheive similar HDI in different ways eg country can high education but low life expectancy and vice versa
causes of inequality
wage and tax levels
property ownership and inheritance laws
unemployement levels
level of gov benefits
education levels
what does infrastructure mean
basic facilities and services needed for the country and its economy to function
examples of infrastructure
roads
schools
water supplies
energy supplies
why does poor infrastructure make it hard for economies to grow
eg
- poor infrastructure links= difficult to move goods in and out of the economy
- if energy supplies are unreliable firms and factories wont be able to operate efficiently
- if telephone services are scarce hard time coordinating their operations
- difficult to attract foreign direct investment
what happens if the countrys population is growing faster than its economy
fall in GNI per capita, puts pressure on education system since more children.
Household poverty can keep children out of school can lead to low education standards which in turn leads to low productivity as t hey have less human capital making it difficult to attract FDI
how can disease affect countrys economy
result in lower productivity if ppl are unable to work can put strain on countrys health care system
Strategies to help countrys develop
aid and debt relief
structural change
policies favouring either an interventionist approach or a market-orientated approach
what does aid mean
transfer of resources from one country to anotherdi
different types of aid
bilateral
multilateral
tied `
what is bilateral aid
when donor country sends aid directly to recipient country
what is multilateral aid
when donor countries pass the aid to an intermediate agency (World Bank) which then distributes the aid to recipient countries.
tied aid
aid sent on condition that the money is spent in a particular way
what is development aid
aid for emergency relief which can be used to promote development
arguments for development aid
reduces absolutely poverty
if improves help and education can increase human capital
lots of multiplier effects
arguments against development
can be misused by corrupt governments
money may not be used in the appropiate way
doing for favours from the donor country than instead of actually helping them
what is debt relief
cancelling debts owned by developing countries
arguments for debt relief
- frees up money improving infrastructure and public service which can contribute to long-term economic growth
- money saved can be invested in capital goods
-allows countries to participate in global trade
arguments against debt relief
can lead to moral hazard and dependency culture
more money possibly misused if gov if corrupt
how can agriculutral sector help promote growth
through comparative advantage which can be used as stepping stones for other sectors
how can tourism discourage and promote growth:
growth:
earns foreign currency and foreign investment and employment
no growth:
-employment may be seasonal low-skilled so elastic and less pay, -bad for balance of payments more imported goods
income elastic so economic downturns can make demand fall quickly
what are floating exchange rate systems and how could they promote growth
improve efficiency and productivity because it helps the market to react easily to international demand
what is microfinance
provides loans to small businesses and low income individuals who may not be able to get and from traditional banks
adv of microfinance
help them to become to more financially independent by developing their uses o investing in their educationi
disadv of microfinance
can not reduce poverty on a large scale
what is an inward-looking strategy
seek to protect domestic industries until they’re ready to compete internationally
short term aim of inward looking strategies
create jobs
reduce poverty
improve balance of payments
what is an outward looking strategy
when they try emphasise free trade
deregulation and foreign investment
benefits for outward-looking strategies
greater free trade
increased efficiency and competitiveness
drawbacks of outward looking strategies
economic dependency
what are interventionist strategies
similar to inward looking strategies eg import substitution, subsidies and high exchange rates
what di fair trade scheme try to aim for
offer farmers in developing countries a guaranteed minimum price
how NGOs (non government organisations) can support development
may offer microfinance, training in business skills technical or medical assistance
what is sustainability
meeting the needs of people now with making it harder for the people of the future to meet their own needs
disadv of sustainability
there is no internationally agreed way to measure how sustainable a countrys economic growth is
hard to introduce policies to achieve sustainable growth isnt easy international agreemens are vital and there are a lot off trade offs
why is international agreements vital for ensuring sustainable development
eg if one government aims to reduce pollution then its transport industry may be at a disadvantage compared to other countries
