theme 4 : economic growth and economic development

economic growth definition

• a positive change in the level of production of goods and services by a country over a period of time

• measures change in output

how is economic growth measured

expressed in % terms of the gross domestic product (GDP) of the country

why is economic growth a key objective for most govs

• basic economic problem

• people always want more

• govs aim to satisfy people

5 advantages of economic growth

• higher living standards

• employment effects

• fiscal dividend - increase in corporation tax / income tax / VAT

• investment acceleration effect - positive cycle, rich consumers attract businesses, businesses bring jobs

• growth and business confidence

economic growth as a measure of GDP fails to take into consideration what 7 things

• population

• inequality

• pollution

• health

• education

• misuse of resources

• human rights

economic development considers how to promote improving factors such as

• health

• education

• working conditions

• domestic and international policies

• market conditions

what is HDI

• un index used to rank countries by level of human development

• usually also implies whether a country is developed, developing or underdeveloped

what is HDI based on

• life expectancy at birth

• average years in school

• per capita income

5 countries with the highest HDI globally

• Switzerland

• Norway

• Iceland

• hong kong

• Denmark

what other indicators are there of economic development / standard of living

• persecution

• happiness

• cost of living

• PPP

• weather

• sectors of production

• corruption

• hygiene

• crime rates

economic development definition

• improvement in the overall standard of living and quality of life in the population

• involves an improvement in the quality of those goods and services

• measured by HDI

characteristics by LEDC’s (lesser economically developed country)

• low per capita income - low average incomes

• high levels of poverty

• high inequality

• limited infrastructure (including transport, communication and electricity networks)

• limited human capital

• dependance on primary commodities - often relying on exporting primary commodities

limitations of HDI

• wide divergence within countries

• HDI reflects long term changes and may not respond to recent short term changes

• may hide widespread inequality

• economic welfare depends on several other factors e.g. threat of war, levels of pollution