6.5 Economic Growth And Development Flashcards
What does economic growth refer to?
The increase in the level of national income over time
What is development?
The multidimensional concept which measures income, availability of basic goods and services and freedom of individuals to make choices on social and economic levels
Characteristics of less developed economies
- low levels of real GDP per capita
- dependence on primary products for export revenue
- fast population growth
- a high proportion of the population based in rural areas = employed in agriculture
- poor levels or infrastructure
- poorly developed financial markets
What are the indicators of development?
- Human development index
- Human poverty index
- Gender-related development index
- Social indicators
What is the human development index?
Takes into account
- real national income per capita (based on PPP exchange rates)
- life expectancy
- mean years of schooling
Limitations of HDI
- means years of schooling may be high but doesn’t mean high levels of education
- dosent take into account freedom of the population
- issues related to income per capita not being represented e.g distribution of this income
Why can social indicators include?
- education levels
- access to health and education
- literacy rates
Factors affecting growth and development
- investment
- education and training
How does investment affect growth and development?
- investment in infrastructure e.g transport links, public services would be more useful for development than e.g military investment
How does education and training affect growth and development?
- education adds to the economy’s intellectual capacity e.g boosting literacy rates = development
- training increases workers employability either boosting productivity or increasing the range of jobs they can perform
What are the eight barriers to economic growth and development?
- poor infrastructure
- corruption
- inadequate human capital
- lack of property rights
- primary product dependency
- volatile earnings from commodities
- an undeveloped financial system
- institutional factors
Why is corruption a barrier to economic growth and development
Corruption, especially in public office, which makes a country a less attractive place to locate in terms of FDI
Why is inadequate human capital a barrier to economic growth and development
Lack of investment in education and training means the population is not adequately equipped for development of a business sector, or will be unattractive to MNCs looking for an appropriate workforce
Why are institutional factors a barrier to economic growth and development
A lack of certain institutions such as stable government, a viable health service and a legal system make it much harder for development to take place
Why is an undeveloped financial system a barrier to economic growth and development
This means those looking for capital cannot access the funds needed to set up or expand business operations
