Extract 3 - primary product dependancy and the terms of trade

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Primary Product Deoendancy and the Terms of Trade

Text and commentry

  • 3 focuses on primary comoodity dependance and considers whether a rich endowment of natural resources can be used to finance and promote economic growth and human developement
  • according to world bank, during past 4 years, copper has accounted for an av of 66% of total zambian exports
  • mining companies have paid 16% of the taxes and other revenue that the zambian govt has collected

Developemnt traps

  • conflict
  • reliance on natural resourcs
  • being landlocked with bad neighbours
  • bad governance
  • zambia is the 86th largest export economy in the world
  • 66th most complex economy acording to econoic complexity unit

Zambia dn amalawi real GDP per capita

  • a period of sustained economic growth has led to significant increased in their real gdp per capita
  • in 2008 zambia over took the sub saharan average and is now a lower middle income country
  • malawi on other hand has been left behind; real incomes per head have increased at a much slower rate and it remains one of the poorest countries on the planet with significantly low HDI

development progress in zambia LR

  • since 2000 life exp at birth has risen by over 16 yrs which is remarkable given the HIV ads related decline in life exp between 1980 and 2000 (declined 10 yrs)
  • between 2005 and 2013 real GNI per capita has risen by 34% and zambias HDI value has gone from 0.471 to 0561
  • zambia has risen 7 places in global hdi rankings over recent years
  • a lot of the drugs have been provided by the mining companies - another reason why when copper prices fall is a problem for the whole ecnonomy 

africa and changes in hdi emasures 1005-2012

  • zambia has outperformed the av improvement in gni per apita and health and education outocoes over the years 20005-2012
  • other african counties have done even better such as rwanda angola and ethiopia

limitations of hdi

  • standrd hdi measure does not take into account qualitative factors such as cultural identity and political freeedoms (human security, gender opportunities and human rights for example)
  • gni per capita figure - and consequently the hdi figure - takes no account of income distribution
    • if income is unevenly distributed then gni per capita will ba an innaccurate measure of the monetary well being of the poeple
    • ineqeuitable development is not human development
  • purchansing power parity (ppp) calues used to adjust gni data change quickly and can be inaccurate or misleading
  • 2010 saw a launch of a new inequality ajusted hdi, a gender inequality index and a multidimensional poverty index. av loss in the hdi due to inqueality is about 23% - for zabia it is 34%

HDi progress: education indicators for zambia - 2014

  • mean years of schooling 6.5
  • expected years of schooling 13.5 
  • adult literacy rate % ages 15 and older 61.4%
  • population with secondary education % aged 25 and sbove 35%
  • primary enrolment % children 114%
  • secondary enrolement % children 101%
  • primary school drop our rates 47%


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