Economic development and economic growth
Economic growth - when a country has the potential to increase their GDP. This is best measured in real level of output.
Economic development - the overall improvement of the peoples lives in the country. Economic development does not necessarily increase just because there is an increase in economic growth, the government needs to focus on preventing decrease in the standards of living within the country, rather than focusing on increasing industrial factors.
"if one or two of the central problems (poverty, unemployment or equality) have been growing worse, especially if all three have, it would be strange to call the result 'development' even if per capita income doubled" - Daudly Seers
Sustainability - The ability of the environment to survive its use for economic development
If economic growth is to be sustainable, it must be neutral to the environment - hence all resources must be renewable and unharming to the environment.
To have a sustainable economic growth, there need to be invested in recycling and renewable energy for instance
“We cannot hope to create a sustainable culture with any but sustainable souls” - Derrick Jensen
Sources of economic growth
The sources of economic growth does not differ between a lesser developed country or a higher developed country. There are four main sources:
Natural factors - quality and quantity of land, minerals, fuels and climate
Human factors - supply and quantity of labor.
Physical capital and technological factors - quality and quantity of machinery factories and infrastructure
Institutional factors - banking and legal systems. May also include developing factors such as a strong health care system
“Government is not the generator of economic growth; working people are” - Phil Gramm
Does economic growth lead to economic development?
The book discusses five causes in which economic development reacts to economic growth
Higher incomes - this can increase the standards of living, as the people will be able to get better food, better clothes and even in some cases a better house
Improved economic indicators of welfare - this includes average life expectancy, literacy rates and average years of schooling
Higher government revenues - a nation with a high government revenue will be able to provide its citizens with essential services such as education, health care and infrastructure
Creation of inequality - economic growth achieved through market based initiatives can lead to a larger GDP, and inequality as the rich gets richer and poor gets poorer
Negative externalities and lack of sustainability - as countries tries to increase their economic growth, they can create negative externalities due to a lack of sustainability
“Economic growth may one day turn out to be a curse rather than a good, and under no conditions can it either lead into freedom or constitute a proof for its existence” - Hanna Arendt
Characteristics of developing countries
Low standards of living - this is classified as low income, inequality, poor health and inadequate education
Low levels of productivity - this is often caused by poor health of workers, low education standards, lack of physical capital and lack of access to technology
High rates of population and dependency burdens
High and rising levels of unemployment and underemployment
Substantial dependency on agricultural products and primary product exports
Prevalence of imperfect markets and limited information - as developing countries have focused on a market-oriented approach to economic growth, they have been facing a rising level of imperfect markets. Some countries lacks the factors to enable a market to work
Dominance, dependence and vulnerability in international relations - developing countries are highly dependent on welfare from developed countries
"A multi-polar world can not exist without recognising the status and participation of developing countries" - Li Peng
Diversity among developing countries
Despites most developing countries having similarities, it is important to remember their differences as no two snowflakes looks the same.
Historical background - a country's current state is often defined by its past.
Geographic and demographic factors - most developing countries comes in different sizes and shapes. The level of population and size of the country can determine the country's fate
Ethnic and religious breakdown
The structure of industry - not all developing countries are dependent on export
Per capita income levels - how much does the individual person make
Political structure - democracy, monarchy, military rule, single party states, theocracies & transitional political systems
“In an underdeveloped country don't drink the water. In a developed country don't breathe the air” - Jonathan Raban
International development goals
The millennium development goals (MDGs) were adopted by world leaders in 2000. The aim of the goals were to have them achieved by 2015. The goals are as follows:
Goal 1 - Eradicate extreme poverty and hunger
Goal 2 - Achieve universal primary education
Goal 3 - Promote gender equality and empower women
Goal 4 - Reduce child mortality
Goal 5 - Improve maternal health
Goal 6 - Combat HIV/AIDS, malaria and other diseases
Goal 7 - Ensure environmental sustainability
Goal 8 - Develop a Global Partnership for Development
"All that is valuable in human society depends upon the opportunity for development accorded the individual" - Albert Einstein