4.1 Understanding Economic Development Flashcards Preview

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Flashcards in 4.1 Understanding Economic Development Deck (24)
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1
Q

What is economic growth?

A

Increases in output and incomes over time

2
Q

What is economic development?

A

A process that leads to improved standards of living for a population as a whole.

3
Q

What was ‘trickle-down’ theory?

A

The theory that believed that the benefits of growth would eventually trickle down to everyone.

4
Q

What are the three core values of human development?

A
  1. Life Sustenance: Access to basic services such as education, healthcare, food, clean water, clothing and shelter.
  2. Self-esteem: The feeling of self-respect, dignity and honour - linked to the absence of exploitation.
  3. Freedom: Ability to choose and act in a way that you wouldn’t be able to in poverty.
5
Q

What sources of growth are particularly important in developing countries?

(4)

A
  • Increases in the quantity of physical capital
  • Increases in the quantity of human capital
  • Development and acquiring new appropriate technologies
  • Institutional changes
6
Q

Why is it easier for a resource-poor country to develop rather than a resource-rich country?

A

Resource-poor countries are unable to depend on their natural capital so seek to industrialise and to improve human capital.

Whereas, despite resource-rich countries being able to sell lots of their resources to pay for development, in doing so they become dependant on resources.

7
Q

How could you represent economic growth and development on PPC curves?

A

PPC of industrial goods vs merit goods.

Expanding out = economic growth

Moving to a position with more merit goods = economic development

8
Q

How can you distinguish between economically more developed and less developed countries?

A

By using GNI per capita, the World Bank divides countries into 4 groups.

9
Q

What income groups are linked with economically less developed countries?

A
  • Low income
  • Lower-middle income
  • Upper-middle income

(GNI per capita

10
Q

What income groups are linked with economically more developed countries?

A
  • High income ($11,906=< GNI per capita)
11
Q

What are common characteristics of developing countries?

A
  • Low levels of GDP/GNI per capita
  • High levels of poverty
  • Relatively large agricultural sector
  • Large urban informal sector
12
Q

Why are high birth rates a problem in developing countries?

A
  • Rapid population growth requires rapid output and income growth for GNI per capita to increase
  • Rapid population growth causes a high dependency burden on families and/or government
  • Negative consequences on birthing mothers
  • Rapid population growth contributes to higher environmental degradation
13
Q

What causes a dual economy?

Examples?

A

It arises when there are two different and opposing sets of circumstances that exist simultaneously.

  • Wealthy, highly educated people / poor, illiterate people
  • A formal urban sector / an informal urban sector
  • High-productivity industrial sector / low-productivity traditional sector
  • a ‘modern’ commercial agricultural sector / a ‘traditional’ subsistence agricultural sector
14
Q

What is the poverty cycle (trap)?

A

The connection between low incomes, low savings, low investment and so on and the idea that poverty perpetuates itself from one generation to the next.

15
Q

How is poverty transmitted across generations?

A
  • Low-income people are usually low-skilled and have low-productivity, as well as low levels of physical capital (equipment, basic utilities, sanitation)
  • They cannot send children to school (can’t pay for school/transport to school)
  • Cannot afford medical care or nutrition, causing disease and physical disadvantage.
  • They often have large families, so any income is overstretched and insufficient.
16
Q

How can a community break out of the poverty cycle?

A

Usually by intervention and investment of some sort.

17
Q

In what aspects can economically less developed countries differ?

(5)

A
  • Resource endowments (natural resources and human and capital resources)
  • Climate
  • History
  • Political system
  • Political stability
18
Q

What are the UN Millennium Development goals?

(don’t name them)

A

Goals established in 2000 to eliminate extreme poverty, hunger, diseases and environmental damage.

19
Q

Why might GDP per capita be a better indicator?

Why might GNI per capita be a better indicator?

A

GDP per capita: better indicator for the level of output per person in a country.

GNI per capita: better indicator of the standards of living of the people in a country.

20
Q

What does PPP mean?

A

Purchasing Power Parities (PPPs) mean the buying power equivalence. The amount of a country’s currency that is needed to buy the same quantity of local goods and services that can be bought with one US dollar in the USA.

21
Q

What other factors other than financial can you compare?

A
  • Health indicators (infant mortality rate, life expectancy)
  • Education indicators (literacy rate, school enrolment)
22
Q

What are composite indicators?

A

Indicators that take a summary of many different measures of development

23
Q

What is HDI?

A

The Human Development Index (HDI).

It is the best-known and widely used index of the UN for measuring development.

24
Q

What are other composite indicators?

A
  • Inequality-adjusted Human Development Index (IHDI)
  • Gender Inequality Index (GII)
  • Multidimensional Poverty Index (MPI)
  • World Bank Development Diamond