Economic Growth and Development
- Created by: ekenny5
- Created on: 17-04-22 17:00
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- Economic Growth and Development
- growth vs development
- growth is a measure of increase in real national income or national output
- development is an improvement in the quality of life and living standards
- literacy rates
- life expectancy
- healthcare
- measures of economic development
- real income per capita
- levels of literacy and education standards
- levels of healthcare
- quality and availability of housing
- level of environmental standards
- life expectancy
- HDI
- Human Development Index
- focuses on longevity, basic education and minimal income of life
- a decent standard of living is calculated by GNI per capita adjusted to purchasing power parity standards
- limitations
- not representative of regional differences
- doesn't respond to short term changes
- doesn't account for inequality
- only quantitative not qualitative
- Characteristics of less developed economies
- lower income per capita
- lower levels of productivity
- high dependency on exports
- many living in rural areas
- limited support of a welfare system
- fast growth of population
- rapid urbanisation
- weakness in infrastructure
- weakness in institutions
- higher tariffs and import controls
- less access to advanced country markets
- Factors affecting growth and development
- levels of infrastructure - eg transport and communication
- education - significant impact on productivity
- levels of inward investment - higher levels of capital attracting MNCs
- levels of saving/capital
- political stability
- macroeconomic stability - encourage investment
- labour mobility
- foreign aid
- natural resources
- free trade vs protectionism
- Barriers to growth and development
- infrastructure gaps
- export dependency
- macro instability
- conflict and corruption
- savings gap
- natural capital depletion
- inequality
- lack of competitive markets
- lack of property rights
- human capital weaknesses
- Policies to promote growth and development
- free market: privatisation, deregulation, lower taxes, trade liberalisation
- interventionist: spending on public goods to improve human capital
- competitive devaluation of the currency
- attract inward FDI
- attract skilled migrants
- promote tourism
- anti-corruption policies
- Overseas aid
- well-targeted aid can enhance growth potential, but the effects may not be seen for many years
- bi-lateral aid: from one country to another
- multi-lateral: channeled through international bodies
- humanitarian: disaster relief
- can increase investment in infrastructure
- long term aid for health and education can improve HDI
- add around 0.5% to growth of poorer countries
- criticisms
- lack of transparency
- dependency on aid
- distorts market forces
- growth vs development
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