Economic development DAII

What is economic development

Quality of life, education, health, material living standards, reduction in poverty, employment/ higher incomes

Does growth = economic development

If GDP per capita increases

What are the characteristics of developing countries

Low standards of living

Low productivity - working in low pay, insignificant jobs

Low savings - lack of/ lack of trustworthy financial institutions also lack of money to save

High population growth - children needed to work farms ect

Primary sector dominance (Agriculture)

Incomplete markets

Higher unemployment

Low economic power international wise

Define living standards

Usually measured by income or real gdp per capita

Indicates how well of individuals are considering their access to goods and services and the quality of these

Draw Lorenz curve

What does it show

Income inequality in an economy

What are the aspects of the HDI

Longevity - life expectancy at birth

Knowledge - School enrolment, adult literacy

Standard of living - access to goods and services (GDP per capita)

How to work out Gini coefficient

What does coefficient show from 0-1

A divided by B

0 is perfect equality

1 is perfect inequality

What is FDI

When a firm with it’s major headquarters in a country opens a new part of the business/ branch in another country

Benefits of FDI

Injection into circular flow - increased employment

positive BoP effects

Improved productivity domestically

Infrastructure development

Technological transfer

More tax collected

Fills savings gap

Technological transfer

Tax revenue collection increases

Negative effects of FDI

Environment costs

Tax revenue could be lower than expected

Employment may be insignificant if they bring own workers

MNCs may invest in labour saving technology

MNCs could exploit resources and then leave once depleted