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What is primary product dependency
dependency related to the proportion of GDP that is accounted for by commodity exports, the proprtion of exports that are commodities
What is volatility of commodity prices
the more price inelastic the demand for a commodity, the more likely they are to experience fluctuations in price
price increase leads to large gains in revenue or the opposite, making it difficult for firms to predict revenues
What are saving gaps
the differences between actual level of saving in an economy and level of saving needed to finance the investment required for a higher rate of growth
What is the foreign currency gap
the difference between actual level of exports and level of exports needed to create higher economic growth for an economy
What is capital flight
savings sent abroad by companies which is seen as being more secure
What are demographics
dependency ratios - % of youth - can be dyanmic but when high they are a burden on systems like education and food demand
What are debts
countries look out loans when interest rates were low
to make repayments LDCs would borrow more which led to a third world debt problem
What are the infastructures parts of India/Nepal
growth in physical capital as with human capital enables increased production
What are education/skills
raises human capital, productivity increases can be used to harness new tech
low middle income countries suffer ‘brain drain’
What is the absense of property rights
the absence of rule of law
can’t defend the ownership of assets the result is lower investment and output
What is corruption
rent-seeking behaviour which attempts to gain a share of an existing pot of income or wealther rather than creating higher income or wealth
What are remittances
migrants will work and send a large proportion of income home
Haiti - 21.1% of export earning are in remittances
What are the gender issues
women in LDCs disadvantaged compared to men, they complete few schooling years and therefore less human capital
excluded from many jobs, maternal death rates are significant
under use of half the population reduces the GDP
How does the environment contribute
As economies develop, damage to environment rises
LDCs govt more focused on growth rather than safeguading, environment regulations tend to relax
How does technology contribute
development requires countries to gain tech and then apply them to production process
must be affordable and a certain level of human capital is required
What is access to credit and banking
financial systems enable saving with interest, borrowing money, investing etc
LDCs lack these thus limiting saving now for spending in the future
Micro-financing - small loans, targeted at grass root level - enables investment
What is the Harrod-Domar Model
states that investment, savings and technological change are the key variables in determining economic growth
saving money for investment, facilitates expenditure on new technology, increaseing productivity therefore LRAS shifts right
Issues with the Harrod-Domar Model
low incomes in developing countries reduce ability to save
lack of sound financial system - prohibits saving and investment
R&D needed to improve capital output ratio
6 non-economic factors that can impact developing countries
Corruption
Poor Governance
Wars
Geography
Health Factors
Gender Inequality
