Edexcel A Level Business (9BS0) Theme 4 - (4.1.1)

4.1.1 Growing economies

BRICS

The abbreviation ‘BRICS’ stands for Brazil, Russia, India, China, and South Africa, which are all emerging economies that collaborate in various domains such as economic development and diplomatic relations.

Economic Growth

Economic growth refers to an increase in the production and consumption of goods and services in an economy over a period of time, typically measured by the rise in value of Gross Domestic Product (GDP).

An Economy

An economy refers to the system of production, distribution, and consumption of goods and services within a country or geographic area, encompassing various sectors and activities.

Emerging Economy

An emerging economy is a nation with business activity in the process of rapid growth and industrialisation, often characterised by lower income per capita, increased investment, and rising living standards. These economies offer great potential but can bring significant risk.

Employment Patterns

Employment patterns refer to the trends and variations in types of employment, job roles, productivity and labour market dynamics within an economy over time, influenced by economic conditions and societal changes. A key indicator of economic growth.

GDP

Gross Domestic Product; a measure (in USD) of all finished goods and services produced within a country's borders over a specific period of time. It is used to gauge the economic performance and health of a country, reflecting its overall economic activity.

HDI

Human Development Index; a combined index of life expectancy at birth, level of education, and per capita income (standard of living) and is used to rank countries into levels of human development.

Health

Health refers to the overall physical, mental, and social well-being of individuals, influencing productivity and economic performance within a society. It encompasses access to healthcare, nutrition, and lifestyle factors that contribute to quality of life.

Literacy

The ability to read and write, which significantly impacts individual empowerment and economic development. Literacy level is a key indicator of growth.

MINTS Economies

MINTS economies refer to the emerging markets of Mexico, Indonesia, Nigeria, Turkey, and South Africa, recognised for their potential for rapid economic growth and development.

Primary Sector

The primary sector involves the extraction and harvesting of natural resources, including agriculture, fishing, forestry, and mining, serving as the foundation of a country's economy.

Secondary Sector

The secondary sector encompasses industries that transform raw materials from the primary sector into finished goods, including manufacturing, construction, and processing. This sector plays a crucial role in industrial development and economic growth.

Tertiary Sector

The tertiary sector focuses on the provision of services rather than goods. It includes industries such as retail, hospitality, finance, knowledge industries and healthcare, contributing significantly to GDP and employment.

Mature Economy (Developed Economy)

An economy that has reached a stage of stable (and often low) growth, characterised by low birth rates and steady population growth. It typically features a balanced mix of sectors and high levels of income.

Migration

The movement of people from one place to another, often for the purpose of seeking better economic opportunities, education, or living conditions. Migration can be internal (within a country) or international (across countries).

Drawbacks of using GDP as a growth measure

GDP may not accurately reflect the overall economic well-being of a country, as it does not account for income inequality, cost of living, exchange rates or the value of the hidden economy. Additionally, it overlooks quality of life factors that can impact citizens' happiness and welfare.

Implications of Economic Growth for businesses

The effects of increased economic activity on businesses, including potential for higher profits, expansion opportunities, and increased competition. Economic growth can lead to greater consumer spending, influencing business strategies and investment decisions.

Challenges of Economic Growth for businesses

The obstacles and difficulties that businesses may face as a result of rapid economic growth, such as inflation, resource shortages, and labour market pressures that can affect operational efficiency and sustainability.

Purchasing Power Parity (PPP)

A method used to determine the relative value of currencies, allowing for a comparison of economic productivity and standards of living between countries by considering the cost of goods and services.

Black Economy

A part of the economy that is not monitored or regulated by the government, consisting of unrecorded transactions and income, often to avoid taxes or regulations.

GNI

Gross National Income is similar to GDP but includes net income receipts from nationally owned businesses in overseas locations.

GDP per capita

A measure of the economic output of a country divided by the number of people in that country, indicating an average economic productivity per person (per capita).

Importance of GDP per capita expressed at PPP