Economic Growth and Economic Development

Comprehensive flashcards covering Economic Growth, Economic Development, measurement formulas, constraints, and development strategies.

Economic Growth

An increase in the production of goods and services in a country over a year, which serves as a prerequisite for Economic Development and is measured using Real GDP.

Economic Development

A process focused on people and their standard of living, housing, healthcare, and education, measured using GDP per capita and social indicators.

GDP per Capita Formula

Calculated as $\frac{\text{GDP}}{\text{population}}$, which represents the average of each person's earnings.

Real GDP Growth Rate Formula

Calculated as $\frac{\text{real GDP in yr 2} - \text{real GDP in yr 1}}{\text{real GDP in yr 2}} \times 108$ as specified in the study guide.

Economic Indicators

Indicators used to look at a country's overall Economic Growth, including unemployment rate, inflation rate, and investment rate.

Social Indicators

Indicators used to assess a country's overall Economic Development by showing how well society is doing.

Productivity

The relationship between real output and one unit of factor input.

Signals of Productivity Increase

Observed when output increases while input remains the same or declines, output increases faster than input, output remains constant while input declines, or output declines at a slower rate than input.

Capital Widening and Deepening

Strategies where increasing capital per worker increases output, requiring investment financed by savings ($S = I$) to build the capital stock ($KS$).

Technological Change

The introduction of a technical instrument, technique, or method that extends human ability and allows more goods and services to be produced with the same inputs through innovation.

Efficient Administration

Execution of policies in a manner that minimizes time wastage and inconvenience, avoiding nepotism, corruption, and laziness which increase transaction costs for businesses.

South Africa Savings Constraint

SA's savings amount to about $15\%$ of GDP, but a savings rate of $21\%$ of GDP is needed to sustain an annual economic growth rate of $6\%$.

South Africa Investment Constraint

SA's fixed investment rate must increase from at least $15\%$ to $25\%$ for the economy to grow by $5\%$ each year.

Senior Certificate Bachelor's Pass Rate

In South Africa, only $20\%$ of the candidates who passed the Senior Certificate examination achieved university admission to a bachelor's degree.

2009 Learnership Trade Test Pass Rate

In $2009$, although more candidates wrote the learnership (apprenticeship) trade test, only $40\%$ passed, which is too low to meet economic needs.

Economic Impact of HIV/AIDS

Disproportionately infects people of working age, destroying knowledge and experience, lowering production, and escalating medical expenses that reduce savings, taxes, and profits.

Attracting New Businesses

An Economic Development method that creates employment opportunities to promote diversity and growth in the local economy.

Building Community Capacity

An Economic Development method aimed at helping individuals develop their own skills so they can maximize available opportunities.

Expanding Local Markets

An Economic Development method where local government promotes local products and markets through export promotion and local substitution.

Use of Outdated Facilities

An Economic Development method involving the transformation of old or unused facilities to meet local community needs.

Promoting Direct Investment

An Economic Development method where government upgrades infrastructure and builds new facilities to generate jobs.

Effective Use of Natural Resources

An Economic Development method focused on utilizing natural resources effectively to elevate the standard of living of local residents.

EPWP

Expanded Public Works Programme, highlighted as part of growth and development initiatives aimed at meeting basic needs.