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Summary AQA A-level Economics: Economic Development
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Key Summary Notes for the AQA A-level Economics course on Economic Development, guaranteed to boost you to the top grades.
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Economic DevelopmentWhat is Economic Development?
- There is no precise definition
- These two definitions by ‘sen’ and ‘todaro’ are best discribiters.
- Reference both definitions
- USE AQA DEFINITION
Sen: The process of improving people's wellbeing and quality of life,
involving improvements in standards of living, reduction in poverty,
improvement in health and education along with increased freedom and
economic choice.
Todaro: (agrees with Sen - but breaks down development into three goals)
1) Availability and distribution of life sustaining goods (food, shelter, health)
2) An increase in Standards of living (material/non material - car/education)
3) Expansion of economic and social choices. (freedom of choice)
AQA Best Definition: The process of improving the quality of all human
lives and capabilities by raising peoples levels of living, self esteem and
freedom.
Economic Growth Vs Development:
- Economic Growth and Development are not the same
- Growth is necessary but not sufficient enough for development.
Economic growth: The change in physical quantity of goods and services
produced in an economy. (INCREASE IN GDP)
Benefits if Growth towards Economic Development:
1) HIgher Incomes -
Job creation, Increased Quality of Life, Reduce Income Inequality ,
Reduction in Poverty
2) Higher Profits -
, Confidence Rises - Investment Into Capital - Job Creation
Reinvestment - Improvements in Technology - moving towards secondary
sector jobs - more incomes.
3) Fiscal Dividend (Higher incomes/profit = higher taxation)
Gov spending on Health -
Gov spending on Education
Gov spending on Infrastructure
Limitation of Growth Towards Development:
1) Distribution of Income - Income Inequality
No guarantee growth is equally distributed
Income Inequality = no increase in standards of living everywhere
Regional Inequality
2) Negative Externalities and Sustainability
In developing countries , growth = negative environmental externalities
In SR natural resources used for growth - LR deplete resources.
Loss of biodiversity/ pollution - health consequences - people suffer - loss
in development.
3) Growth in one Dominant Sector -
Where is growth taking place?
If growth is in one sector - the whole economy does not benefit.
Common Characteristics of Developing Countries:
1) Low Standards of Living
Low Incomes/ Poverty = Low standards of living
2) Low Levels of Productivity
Lack of investment into education/training = low productivity
Lack of investment into capital = low productivity
3) Low levels of Savings
Poverty Trap
Poorly paid jobs = low incomes = low saving = low education = poverty trap
Lack of financial institutions - lack of education about saving.
4) High Population growth
Poor families give more birth - for more workers in primary sectors
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