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Flashcards in Development Economics Deck (46)
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1

growth diagram with and without development

2

poverty cycle diagram 

3

dependency ratio

percentage of old-age adults and below-working age children relative to the number of working-age adults 

4

extreme poverty

earning less than $1.25, in purchasing poewr parity-adjusted terms, per day

5

millenium development goals

  • eradicate extreme poverty and hunger
  • achieve universal primary education
  • promote gender equality and empower women
  • reduce child mortality rate
  • improve maternal health
  • combat HIV/AIDS, malaria and other diseases
  • ensure environmental sustainability
  • develop a global partnership for development

6

expand on two millennium development goals 

eradicate extreme poverty and hunger

  • target: halve the proportion of people living on less than $1 per day
  • indicators: PPP values, poverty gap ratio, share of poorest quintile in national consumption

promote gender equality and empower women

  • target: eliminate gender disparity in primary and secondary education
  • indicators: ratio of girls to boys in primary, secondary and tertiary education, share of women in wage employment in non-agricultural sector, proportion of seats held by women in national parliament

7

human development index

composite indicator of development created by the UN which ranks country development on the basis of average income, education levels and life span

8

gender inequality index

composite indicator of the disparity in well-being between women and men in three areas: reproductive health, empowerment and the labor market

9

poverty trap

self-perpetuating mechanism that contributes to the persistence of poverty in a nation

10

natural resource trap diagram 

11

geography trap diagram 

12

education/poor governance trap diagram 

13

conflict trap diagram

14

institutional and political obstacles to economic development

  • ineffective tax structure: nation is unattractive to foreign investors because of uncertainty, rich households keep savings abroad
  • lack of property rights
  • political instability
  • inequality in income distribution
  • lack of infrastructure
  • lack of access to credit: ineffective banking systems

 

15

social and cultural obstacles to economic development

  • religion: especially if conflict exists
  • tradition

16

domestic factors that contribute to economic development

  • education 
  • health
  • banking, credit, micro-credit
  • reduced fertility rates: reduces burden on working members of society
  • women in workforce increases productive capacity

17

international obstacles to economic development

  • narrow range of exports
  • over-dependence of primary products: commodity prices fluctuate 
  • if value of dominant export declines, standard of living declines over time
  • protectionist policies by rich countries

18

micro-credit

provides financial credit or technology loans to entrepreneurs in poor communities to create small businesses (especially those with a socially beneficial purpose)

19

import substitution policies

protectionist policies meant to reduce domestic consumers' dependence of imported goods, for which they substitute domestic goods and services thus promoting the development of domestic industries

20

international factors that contribute to economic development

import substitution policies

export promotion policies

trade liberalization

WTO

 

21

export promotion policies

  • protectionist measures aimed at increasing the competitiveness of domestic producers in foreign markets
  • subsidies for domestic producers of exportable goods and intential devaluation of the nation's currency give domestic producers an advantage in international markets and promote export-oriented growth

22

diagram showing aid and FDI influence on poverty trap 

23

foreign direct investment

long-term investment by foreign firms into the domestic markets of other countries

24

multinational corporation

large company with trading, manufacturing or service operations across several countries 

25

why are MNCs attracted to developing countries?

low-cost labor

natural resource potential

political stability

 

26

examples of deregulation

  • profit repatriation
  • tax reduction for foreign companies
  • property rights
  • health and safety deregulation 

27

liberalised free market conditions

  • free trade
  • privatisation
  • tradable foreign currency

28

advantages of FDI: capital improvements

  • capital injections can break poverty cycle
  • money increase in capital account leading to more imports of foreign goods
  • investment in domestic infrastructure
  • provides opportunities for research and development
  • stimulate domestic industry if MNC buys locally produced capital goods and services
  • technology transfer improves country's capital stock

29

advantages of FDI: income, employment and training

 

  • employment is increased if MNCs hire significantly from domestic workforce, improve skills of local workers
  • increased income for workers subject to taxation

30

advantages of FDI: market efficiency and choice

  • MNCs may compete with complacent domestic industries
  • MNCs may help country realise its comparative advantages
  • greater choice in goods and services for domestic consumers