Economic Growth and Development

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  • 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

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