unit 5 - Growth vs Development Flashcards by Medhansh Kumar

Economic Growth defination

Focuses on a country’s GDP and it is output driven and it basically how much sustained monetary growth a country goes through.

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Economic Development definition

Focuses on a country’s social and welfare position and is defined as an improvement in the Quality of Life of citizens living there

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Development indicators

GDP per capita
Literacy rate
Poverty rate
Infant mortality rate
Emotional well-being and safety
HDI

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Human Development Index what is it and what are its 4 main parameters

It is a composite indicator that helps in measuring a country’s economic development

the 4 main parameters are:
mean years of schooling
expected years of schooling
life expectancy at birth
Gross national income per capita

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Income vs Wealth

Income is the money you earn over a specific period (e.g., monthly salary, yearly wages). It’s a flow of money.

Wealth is the measure of life term earnings and captures long terms financial stability (eg - assets and homes)

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Poverty cycle

Child born into a poor family
Disadvantage in terms of opportunities and education
Struggles to get a job and escape poverty
Gives birth to new child
Repeats

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Case study - Most consistent high performing country in the HDI

Norway. It has ranked highest from 2019 - 2023 in the HDI due to its advancements in health, economics and education. and in 2024, it had a near perfect HDI rating of 0.966

It provides free or subsidized healthcare services ensuring accessibility to all citizens. 13 mean years of schooling and in 2023, it had a GNI per capita of over $102,000 also help it rank high

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What are the factors contributing to Norway’s economic success?

Diversified economy with high income from oil, gas, and advanced industries
Strong governance and equitable wealth distribution through taxes and social programs

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What are the factors influencing Norway’s social indicators?

Wealth enables investment in public services
High tax revenues fund robust education and healthcare systems
Low population density facilitates efficient service delivery

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Poverty rate of Norway

less than 1%

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GNI per capita of norway in 2023, and according to who, and its ranking in terms of richest countries in the same year?

in 2023, norway had a GNI per capita of roughly %102,460 making it the 3rd richest country during that time

According to world bank

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Norway mean years of schooling and expected years of shcooling

13 mean years of schooling
18 expected years of schooling

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Employment rate of norway in 2023, and comparing to European average

In 2023, Norway had an exployment rate of 77%, far batter than Europe’s average of 65%

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HDI rating of ethiopia in 2022, and its ranking in the same year

0.492

ranked 176th out of 193 countries

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Expected years of schooling and mean years of schooling in ethiopia

Expected = 12.6 years

Mean = 6.6 years

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Population ranking of ethiopia

Second most populated african nation

Life expetcnacy at brith of ethiopia

66 years

factors contributing to economic turmoil in Ethiopia

Heavy reliance on agriculture, vulnerable to climate change
Limited industrialization and poor infrastructure hinder growth
Historical conflicts and lack of access to capital for develop

Healthcare challenges in ethiopia

Very poor state of medical facilities with only 1 doctor per 10,000 people.

Social challenges for Ethiopia

Insufficient funding for public services due to low GDP
Poor infrastructure limits healthcare access in rural areas

Government role in developing a nation (Norway vs Ethiopia)

Norway allocates substantial resources to education, healthcare, and infrastructure. Ethiopia struggles with low tax revenues, corruption and foreign debt.

China - Economic growth vs development

While china has sustained great economic growth over the last decade, it faces issues in economic development such as income inequality, poor living conditions and environmental degradation

State which consistently outperforms its Country in HDI

Kerala and India

Most literate state in India with its literacy rate is nearly 96%, far exceeding the national average of 77%.

Kerala has a life expectancy of around 77 years, higher than India’s average of 69 years. It also has the lowest infant mortality rate in India

Kerala Gross national Income (GNI) is also on par with that of India’s

3 main types of development indicators

Economics indicators

Social Indicators

Environmental Indicators

What is the Gini Coefficient used to measure?

Income distribution within a population.

Economic indicators definition with examples

Measure of a country's financial performance and producitvity eg: GDP per capita, GNI per capita and unemployment rate

Social Indicators definition with examples

Measure of well being and quality of life of people in a society Eg: Life expectancy, Sex ratio, Poverty Rate, Literacy Rate

environmental Indicators definition with examples

Measure of natural environment conditions and resource usage eg: Average CO2 emissions, deforestation rates, Carbon Emissions Per Capita, Air and Water quality

Most developing countries (LEDCs) are focused more on economic growth or development? and for what reasons?

Economic growth reasons: 1. Income inequality 2. Population 3. limited access to tech and raw materials 4. Increasing globalisaiton 5. Coming out of historical injustice/colonisation

Define GNI and GNI per capita

GNI = Total income earned by residents of a country GNI per capita = Average income earned per person

What is sustainable development and what are its 3 pillars

Sustainable development = Meeting today’s needs without compromising future generations. Three Pillars: 🌱 Environmental (protect ecosystems) 👨‍👩‍👧‍👦 Social (reduce inequality, improve quality of life) 💰 Economic (stable and inclusive growth)

What is the Welfare Trap and how does it affect low-income workers?

It's a situation where gaining a job or small income increase disqualifies people from government benefits, leaving them worse off overall. They earn more but lose crucial support like food, rent, or healthcare aid.

Why do welfare Traps discourage people from working

If people know that working results in no net gain (due to lost benefits and rising costs), they may choose not to work, increasing dependency on government aid and slowing down the economy.

Irony of welfare traps and problems of government aid programs

The irony of welfare traps is that they stem from the very policies that were designed to battle poverty. Government aid programs are designed with the intention to priorities aid to those who need it the most. But that would mean some people who are above the required threshold and hence cant qualify wont be able to access these subsidies, regardless of whether they are able to financially sustain that position

Solutions to welfare trap

- Some continue benefits temporarily after employment - Others reduce benefits gradually as income rises - Countries like Norway provide key services (e.g., healthcare, education) for free to all citizens

Why is completely removing government benefits/aid programs not the solution for the welfare/poverty trap

Eliminating aid isn't humane or economically viable. Instead, smarter program design is needed to help people transition out of poverty without financial punishment