Nicole Li
5.1 Differences in economic development between countries
the sustainable increase in living standards for a country, typically characterised by increases in lifespan, education
Economic development definition levels and income
3 stages of economic development Less-developed economy, rapidly industrialising economy, developed economy
human and economic development and diversification
infrastructure
healthcare
education
life expectancy
7 differences of different economic income and quality of life
development industrial development
1. Overdependence on subsistence farming
2. Lack of investment in infrastructure
3. Lack of investment in healthcare and education
4. Overseas trade dominated by developed nations
5. Low levels of consumer demand (vicious cycle of low economic development)
6. Rapid economic growth
8 reasons why some countries are less 7. Famines, wars, corruption...
developed/8 reasons for poverty 8. Low skilled and poorly educated workforce
Low income -> limited purchasing power -> poor incentives to invest -> lack of capital -> low productivity -> low output
Vicious cycle of low economic development -> low income
4 types of overseas aid Food aid, financial aid, technological aid, debt relief
Food aid: stolen+sold illegally, cease domestic agriculture
Financial aid: government corruption, poorly managed
Analyse the unintended consequences of the 4 Technological aid: require training to operate
types of overseas aid. Debt relief: encourage financial irresponsibility
5.2 Living standards
Human Development Index
1. Gross national income per capita
2. Education (expected years of schooling/literacy rate)
3 components of the HDI 3. Health (life expectancy at birth/infant mortality rate)
Real: taken into account inflation
Differences between real, nominal and per capita Nominal: not taken into account inflation
GDP Per capita: total GDP/total population
Definition of GDP The total value of all goods and services produced in an economy in a one-year period
1. GDP per capita
2. Human Development Index
3. Life expectancy at birth
4. LIteracy rates/expected years of schooling
5. Access to safe water supplies and sanitation
Give examples to indicators of living standards 6. Proportion of workers in agriculture
1. We do not know what is produced (e.g. bombs have high value, but do not contribute to good quality of life for the
people).
2. Average measure will be distorted upwards by people with very high incomes
3. Does not take acccount of what and how much people can buy with their incomes or their access to healthcare,
education, clean water
4. Depends on rate of change in population as well (GDP could stay stable but rapid population growth -> decreasing
4 Disadvantages to GDP per capita GDP per capita)
5.3 Poverty
2 types of poverty Absolute poverty, relative poverty
The inability to afford basic necessities such as food, water, education, healthcare and shelter.
Define absolute poverty (how measured) Number of people living below a certain income threshold ($1.90 USD a day)
Having far fewer resources than others in the same society
Define relative poverty (how measured) The extent to which a person's or household's income falls below the median household income in the economy
1. Expansionary fiscal and monetary policy to reduce cyclical unemployment+removing protectionism
2. Progresive taxes on the wealthy to reduce income inequality
3. Cut indirect taxes (VAT, excise duties)
4. More welfare benefits for low income
5. Minimum wage laws to increase income for lowest paid
6. Training schemes to increase skills of poorly educated workforce
7. Attract inward investment from overseas firms
8. Trade with developed nations, and then ask for international aid
9 ways to reduce poverty 9. Subsidize free or low-cost homes
What is the measure for poverty? Global multidimensional poverty index (MPI)
5.4 Population
Definition of population All of the inhabitants of a particular country
Definition of population growth rate Size of the change in the population of a country, as a percentage
3 factors affecting population growth Annual fertility rate, annual mortality rate, net migration (immigration and emigration)
Population growth rates highest in XX and lowest XX: less economically developed countries
in YY YY: more economically developed countries
The number of people not registered in the labour force, and are not economically active. E.g. very young, school
Definition of the dependent population children, students, housewives, and old-age pensioners
Dependency ratio Dependent population / working population
The higher the dependency ratio... The greater the burden on the working population and on scarce resources to support dependent population
1. high birth rates in less-developed countries
2. raised school leaving age
3 reasons for the rising dependency ratios in 3. low death rates and ageing population in developed economies (compulsory pension saving schemes and raising
the world official retirement ages)
How to calculate natural rates of population
growth? Births - deaths
Define birth rates Births per 1,000 people in a population
