3.6.2 Reducing poverty

What is economic growth

increase in real national output

What causes economic growth

increase in quantity or quality of factors of production

How is economic growth shown on a PPF

outward shift of the PPF

What is economic development

improvement in living standards quality of life and freedom

What factors are included in economic development

living standards life expectancy freedom sustainability

Why is economic development considered normative

it involves value judgements about quality of life

How is economic development different from growth

development focuses on quality of life not just output

Why do LEDCs have low savings rates

low incomes and high propensity to consume

How can international aid help LEDCs

fills savings gap and funds investment

What is international aid

financial or material assistance given to a country

What are examples of aid

humanitarian aid grants debt relief infrastructure funding

How can aid improve productivity

by improving infrastructure and human capital

What limits the effectiveness of aid

corruption dependency small aid amounts

Who is Dambisa Moyo

economist critical of foreign aid

What are Moyo’s criticisms of aid

corruption dependency harm to local firms

Who is Jeffrey Sachs

economist supportive of foreign aid

What does Sachs argue about aid

rich countries should give 0.7% of GDP

What are NGOs

non-governmental voluntary organisations

What do NGOs aim to do

support citizens and focus on issues like health and human rights

What is foreign direct investment

capital flow to gain lasting interest abroad

How does FDI reduce poverty

creates jobs transfers technology promotes growth

What is microfinance

small loans to unbankable individuals

How does microfinance help development

increases income encourages entrepreneurship

Who mainly receives microfinance loans

women

What is a benefit of microfinance

financial independence from aid

What is a limitation of microfinance

businesses may fail or loans used for consumption

What is human capital development

improving skills education and training

How does human capital improve growth

raises productivity and innovation

Why is education important for development

allows movement up the value chain

What is infrastructure

transport energy water and communications

How does poor infrastructure affect development

raises costs and limits labour mobility

What is the AIIB

bank funding Asian infrastructure led by China

Why is infrastructure important in China

boosts productivity employment and growth

What is an opportunity cost of infrastructure spending

funds not used elsewhere