Economic Growth and Development Flashcards
Economic Growth
The growth in the value of output in the economy.
Development
The sustained actions that improve the standard of living and economic health of a specific locality.
Growth - Higher Incomes
Implies there are jobs, improving quality of life, material standard of living. Reduces income inequality and reduces poverty when there is high GDP per capita.
Growth - Higher Profits
Firms COULD use profits to reinvest into economy or technology. Helps move from agriculture towards service /manufacturing. Creates jobs to satisfy demand.
Growth - Fiscal Dividend
With higher wages, higher level of taxation corporation and expenditure tax, higher fiscal revenue for healthcare, education and infrastructure.
Distribution of Income
No guarantee that growth will provide total income equality, incomes will differ. Standard of living hasn’t increased to everyone.
Negative Externalities and Sustainability
The requirement for resources contribute to pollution, short term growth created. Future generation no access and pollution will affect health.
Dominant Sectors
Not everyone will benefit from the growth only those involved in a particular industry, income equality.
Overall
Growth is a necessary condition, but not sufficient in achieving development.
GDP per Capita
This shows the average income per person. Could be income inequality, pollution ect shows the production of one country.
GNI
All income created by all the economies factors of production regardless of where they are operating/remittances. High FDI in developing country.
Purchasing Power Parity
This is where GNI is converted into something more universal dependant on cost of living something could cost more in another country.
