Section 5 - Economic development Flashcards
What is human development index
a measure of living standards which takes into account income, education and life expectancy
What is genuine progress indicator
a measure of living standards which takes into account a variety of indicators including income, leisure time, distribution of income and environmental standards
What are the different indicators that can be used to assess the living standard in a country
-Number of people that own given consumer goods i.e cars, laptops or mobile phones
-Number of patients per doctor
-Enrollment in tertiary education
-Adult literacy rate
GDP per head
An increase in real GDP per head would suggest
that living standards have risen
Why does increase in real GDP not necessarily increase living standards
- Real GDP is an average
- Not everyone may benefit from a rise in average income
- Income may be unevenly spread with few receiving much higher income and some not receiving any
- An increase in output and consumption of demerit goods can reduce the quality of people’s health and life expectancy
- Higher crime rate won’t improve living standards
What does HDI do differently to Real GDP per head
It takes into account a wider measure like life expectancy and education
What factor does HDI not take into account
political freedom
environment
What is the Gender inequality index
a measure of gender inequalities in terms of reproductive health, empowerment and labour market participating
What is the happy life expectancy index
an index which multiplies life expectancy by a happiness index
What is gross national happiness
a measure of living standards which includes a wide number of indicators including income, psychological wellbeing, education and ecological diversity
What are the causes of differences in living standards and income in countries
income: can be unevenly distributed between households
wealth: unevenly disturbed because differences in assets inherited by people, their saving and entrepreneurial skills
education: those with higher degrees will have more success in being high skilled workers than those with lower degrees
healthcare systems: Those with access to healthcare will benefit more than those without and suffering from conditions
levels of pollution: Pollution can affect people’s health and wellbeing
working hours: more working hours will mean more income for households
What is absolute poverty
A condition where people’s income is too low to enable them to meet their basic necessities i.e food, clothing, shelter and healthcare
What is relative poverty
A condition where people are poor in comparison to others in the country. Their income is too low to enable them to enjoy the average standard of living in their country
What are the causes of poverty
Being unemployed
Being in low-paid work
Falling ill and growing old
What is the vicious circle of poverty
certain groups of people can be trapped in poverty as poorer people will likely have lower education and healthcare reducing productivity and employment opportunities, this can also affect their children which will create a cycle
What is the multidimensional poverty index
a measure of poverty based on deprivations in education, health and standard of living
What are the possible government policy measures to reduce poverty
Improving the quantity and quality of education
Promoting economic growth
Introducing or raising a national minimum wage
Encouraging more multinational companies to set up in the country
Providing benefits or more generous state benefits
Land reforms
why does improving the quantity and quality of education help reduce poverty
It can increase job prospect and earning potential of the poor and their children
why does promoting economic growth help reduce poverty
increasing government expenditure or reducing rate of interest will increase aggregate demand. It can increase output and create jobs reducing unemployment which is a major factor of poverty
why does introducing or raising a national minimum wage reduce poverty
it tackles the problem of people experiencing low living standards due to low wages
Why does encouraging more multinational companies to set up in the country reduce poverty
the opening up of new firms in a country will create more jobs and employment opppurtinities
Why does providing benefits or more generous state benefits help reduce poverty
the elderly, sick and disabled might not be able to work and have enough savings to support them. Giving benefits may help them avoid absolute poverty
Why do land reforms reduce poverty
many countries have agricultural workers working on land owned by rich land owners. Those who rent or lease land may be reluctant to improve the fertility of land. So making ownership of land more equal may increase output and living standards.
What are some government policies on the distribution of income and wealth
Taxation
provision of cash benefits
provisions of free state education, healthcare, and using labour and macroeconomic policies.
Why does the government intervene in income and wealth
it can become very uneven and create social division.
What is emigration
the act of leaving the country to live in another country
What is birth rate
the number of births in a year per 1000 population in a year
What is death rate
the number of deaths in a year per 1000 population in a year
What is net immigration
more people coming to live in the country than people leaving
What is infant mortality rate
the number of deaths per 1000 live births in a year
What is net migration
the difference between immigration and emigration
What is immigration
the act of coming into a new country from another country
Factors that affect population growth
increase or net immigration
when birth rate exceeds death rate
What are the reasons for different rates of population growth
countries that are developing will likely have higher birth rates as women marry younger and they are not well educated so they do not work and it is cheap to bring up children.
countries where it is expensive to have children and well paid jobs are open to women will have low birth rates.
What are the effects of changes in the size and structure of populations
the gender distribution of a population which indicates the number of males compared to females.
the age distribution in which the division of population into different age groups.
What is a population pyramid
a diagram showing the age and gender structure of a country’s population
What does a population pyramid with low development reflect
it reflects a high birth rate and a high death rate. It has a larger proportion of young people and only a small percentage of people reaching older age groups.
What does a population pyramid of a country with high development reflect
it reflects a lower birth rate and death rate with more people surviving till they enter old age
What is optimum population
the size of population which maximizes the country’s output per head when combined with other resources of land. capital and existing technical knowledge.
what is the formula for the dependency ratio
number of dependent age groups / number in the labour force x 100
A country is said to be under populated if
it does not have enough of human resources to make the best use of its resources in which governments may encourage immigration
What are the positives of an increase in population
If a population is below optimum size the country will be able to make better use of its resources
Size of markets will increase enabling firms to take greater advantage of economies of scale
Increase in factor mobility in which firms training costs will be reduced
Rise in labour force
What are the possible negatives about population growth
concerns about famine. If a country is overpopulated with low agricultural productivity there is a risk of food shortage
Restrictions on improvements in living standards. Resources which could have been used to improve living standards may be used for goods and services for more dependents in population
Overcrowding. traffic congestion and pressure on housing
Environment pressure. More damage to wildlife, water shortages and depletion of non renewable resources
How to reduce birth rate
reduce immigration and reduce country’s birth rate
Consequences of an aging populations
A rise in the dependency ratio - if people are living longer and fewer workers because of net emigration there will be a greater proportion fo consumers to workers
A change in labour force - they be less geographically and occupationally mobile
Higher demand for healthcare - can put burden on country’s health service due to elderly
Greater need for welfare services - to take care of the old
Rise in cost of state and private pensions
Effects of net emigration
Size of working population is likely to be reduced
Average age of labour force will increase making them less mobile
Gender distribution fo population may be affected
Shortage of skilled workers. Doctors may leave for better prospects and conditions
What is economic development
an improvement in economic welfare
What are the causes of difference in economic development between countries
Differences in comes per head
Differences in saving due to differences in come per head
Differences in investment
Differences in population growth
Differences in education and healthcare
Differences in the size of the primary, secondary. and tertiary sectors
Why governments seek to achieve economic development
to get higher real GDP and higher living standards and expand citizens economic and social choices allowing more goods and services in the future.
Why is high growth of population a problem for low economic developed countries trying to get more developed
High growth of population - resources being used to feed and educate children which could be used to increase country’s productive potential and living standard
Why is high levels of international debt a problem for low economic developed countries
High levels of international debt - poor countries have borrowed heavily and in a large proportion of a country’s income is taken up replaying foreign loans meaning it cannot be used to spend on education, healthcare and investment
Why does lack of investment in human capital and capital goods create a problem for low economic developed countries
lack of expenditure on education, training and capital goods holds back increase in productivity, introduction of new technology and International competitiveness.
Why does emigration fo key workers create a problem for low economic developed countries
important high skilled workers like doctors, nurses, teachers and managers that emigrate to find better jobs will leave the original country with less of those workers
Why do trade restrictions on products create problem for low economic developed countries
makes it difficult for developing countries to sell their products at home and abroad as the steepest tariffs tend to be imposed by rich economies on those products which poorer economies concentrate on agricultural produce and labour intensive manufactured goods. Poorer economies will be discouraged from building up their industries
Why does an unbalanced economy created a problem for lower economic developed countries
certain markets may be under developed such as the financial sector. Lack of development is likely to discourage saving and investment
