What is Economic Development? What is the difference between development and growth?
- Economics Development: Improving living standards
- Growth is just about increasing GDP (which does not necessarily improve living standards)
What are 4 indicators of economics Development?
- Human Development Index (HDI) (Main one)
- Inequality-adjusted HDI (IHDI)
- Multidimensional Poverty Index (MPI)
- Genuine progress indicator
What 3 factors is HDI based on?
- Health
- Education
- Income (measured by real GNI at PPP)
*each factor is given equal wright and a figure is found between 0 -1 )
What are the 2 advantages of HDI?
- Easy to calculate (relatively)
- Takes into account 3 important factors
What are 3 disadvantages of HDI?
- Issues with figures (high education does not necessarily mean good quality of education)
- No consideration for equality of income
- Other factors not considered (environment)
it is only an indictor though, so its bound not to be perfect
What is Inequality-adjusted HDI?
- HDI but takes into account inequality
What is Multidimensional poverty Index? What is a pro and a con?
- Measures the percentage of the population who are poor
Pro:
- Takes into account quality of factors e.g., quality of education, safe drinking water etc
Con:
- Not all countries have data to calculate it
What are 11 factors influencing Growth and Development?
- Primary-product Dependency
- Volatility of prices
- Savings Gap
- Foreign Currency Gap
- Capital Flight
- Demographic Factors
- Debt
- Access to Credit and Banking
- Infrastructure
- Education and Skills
- Absence of Property Rights
What is Primary Product Dependency? What are the 4 problems with it?
- Countries that have primary products as their main exports (e.g., farmed shit)
Problems:
- Natural disaster/ Bad weather
- Non-renewable resources (e.g., coal)
- Prebisch Singer Hypothesis
What is the savings gap?
- The difference between actual savings and savings needed to achieve higher growth (i.e., to invest)
What is foreign currency gap?
- When exports from a developing country are too low compared to imports (therefore, not enough funds for investments)
What is capital flight?
- When a large sum of capital is moved overseas (i.e., TNC or migration)
What are 4 non-economic factors limiting growth and development?
- Disease
- Poor climates and geographical terrain
- Civil wars
- Corruption
What are 6 market-oriented strategies to influence growth and development?
- Trade-liberalisation (increased freedom of trade)
- Promotion of FDI
- Removal of Government Subsidies
- Floating Exchange rates system (so Supply and demand determine the value of the currency)
- Microfinance Schemes (access to a range of financial services e.g., loans)
- Privatisation
What are 6 Interventionist strategies to influence growth and development?
- Development of Human Capital (e.g., better skills and education)
- Protectionism (to allow infant industries to grow)
- Managed Exchange rates
- Infrastructure development
- Buffer stock schemes (stabilisation of prices in volatile markets)
- Promoting Join ventures with global companies (shared ownerships of businesses to prevent exploitation)
What are 6 other strategies to influence growth and development?
- Industrialisation (moving from primary sector to secondary sector manufacturing)
- Development of tourism
- Development of Primary Industries (e.g., Saudi Arabia and Oil)
- Fair-trade Schemes (organizations aiming for fair prices, community development, fair working conditions, and environmental protection)
- Aid (countries giving resources to one another)
- Debt Relief (When developed countries write off debt for developing countries)
What are the 3 types of aid?
- Tied Aid: Aid but with conditions
- Bilateral Aid: Direct aid from one country to another
- Multilateral Aid: Multiple countries give aid to an organization that distributes it
What is the aim of the World Bank?
- To bring about long-term development and reduce poverty
What is the aim of the International Monetary Fund (IMF)?
- Ensure exchange rate systems work well
What are Non-Government Organisations (NGO)?
- Organisations that work independently from the Government to provide direct assistance to countries
