4.7: Sustainable Development, 4.8: Measuring Economic Development and 4.9: Barriers to Growth and Development
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111 Terms
What is sustainable development?
Development that meets the needs of the present without compromising the ability of future generations to meet their own needs; does not deplete or degrade resources.
What causes the problem of sustainability?
Conflict between economic goals and environmental goals.
What are the SDGs?
17 goals developed by the UN to meet environmental, political and economic challenges.
What is pollution of affluence?
Pollution caused by high income production and consumption; fossil fuels and common pool resources.
What is pollution of poverty?
Pollution due to economic activity by poor people to survive.
What are some examples of pollution of poverty?
- Cut down forests (firewoods, land).
- Soil erosion (move to fragile mountains/hills).
- Overgraze animals on pasture lands
What is economic growth?
Increase in real GDP overtime.
What is economic development?
Improved standard of living for the population.
How can economic growth lead to economic development?
Economic growth means more output and income, improving living standards.
What does economic development include? (8)
- Increased output and income per capita.
- Improved living standards.
- Reduced poverty.
- Increased access to essentials (food, shelter, merit goods).
- Improved gender equality.
- Increased employment opportunities.
- Reduced unemployment.
- Reduction of serious inequalities in wealth and income.
What is human development?
Process of increasing human freedom, opportunities, well-being.
What are indicators?
Measurable variable that indicates the state or level of something.
What are composite indicators?
A summary measure of multiple indicies/dimesions.
Why are indicators useful? (4)
- Monitor development overtime.
- Draw comparisons between countries.
- Assess performance in respect to goals.
- Devise appropriate policies to fix problems.
What are some examples of economic indicators? (2)
- GDP per capita.
- GNI per capita.
What are some health indicators? (3)
- Life expectancy.
- Infant mortality.
- Maternal mortality.
What is life expectancy?
Average number of years of life in a population.
What is infant mortality?
Number of infants (0-1) deaths per 1000 births.
What is maternal mortality?
Number of women who die from pregnancy-related causes per 100,000 live births.
What are some education indicators? (3)
- Adult literacy rates.
- Primary school enrolment.
- Lower secondary school enrolment.
What are adult literacy rates?
% of people above 15 who can read and write.
What is primary school enrolment?
% of school-age children who are enrolled in primary school.
What is lower secondary school enrolment?
% of children enrolled in lower secondary school.
What are some economic inequality indicators? (4)
- Gini coefficient.
- Poverty lines.
- Minimum income standards.
- Multidimensional Poverty Index
What is a Gini coefficient?
Measure of income equality based on the Lorenz curve.
What is a poverty line?
Minimum income to be able to sustain a family (basic needs).
What are minimum income standards?
Minimum income to be able to participate in society.
What is the multidimensional poverty index?
Measure of poverty based on health, education and living standards.
What are some social inequality indicators? (7)
- Adolescent fertility rates.
- Inequality in undernourishment.
- Inequality in education.
- Gender inequality.
- Child malnutrition.
- Child labour.
- Homelessness.
What are some energy indicators? (7)
- Renewable energy consumption.
- Access to electricity.
- Electric power consumption.
- Households without electricity or commercial energy.
- Share of household income spent on fuel/electricity.
- Energy use per capita.
- Air pollution/deforestation due to energy use.
What are some environmental indicators? (8)
- CO2 emissions per capita.
- Emissions of hazardous substances.
- Birds species threatened.
- Fish species threatened.
- Ozone layer depletion.
- Waste generation.
- Waste water treatment.
- Intensity of water use.
What is the Human Development Index (HDI)?
Composite indicator of development which considers:
- Life expectancy (health).
- Expected years of schooling (education).
- GNI per capita (income equality).
How is HDI calculated?
- Each dimension has a rating between 0 and 1 (0 low, 1 high).
- HDI is an average of the three dimensions.
What are the dimensions of HDI? (3)
- Life expectancy (health).
- Expected years of schooling (education).
- GNI per capita (income equality).
What is the inequality-adjusted HDI?
HDI that is adjusted for inequality.
What is the Gender Inequality Index (GII)?
Measure of gender inequality based on reproductive health, empowerment and employment.
What are the dimensions of the GII? (3)
- Reproductive health.
- Empowerment.
- Labour market participation.
What is the Happy Planet Index (HPI)?
Measure of sustainable well-being.
What are the dimensions of HPI? (4)
- Life expectancy.
- Well-being.
- Inequality of outcomes.
- Ecological footprint.
What is the advantage of composite indicators?
Give a greater picture of the economy compared to a single indicator.
What are the limitations of indicators? (2)
- May present conflicting perspectives.
- Based on statistical information.
Why is it a limitation that indicators are based on statistical information? (5)
- Some countries have limited capacity for data collection.
- Data may not be fully available.
- Estimates made for missing data.
- No access to most-recent data.
- Definitions different between countries; incomparable.
Can economic growth occur without economic development?
Yes.
Can economic development occur without economic growth?
Yes; of there are policies to support low-income households.
How can economic growth lead to development?
Increased output may lead to higher incomes and more merit goods.
What are the barriers to economic growth and development? (23)
- Poverty cycles.
- Economic inequality.
- Lack of infrastructure.
- Limited access to appropriate technology.
- Low levels of human capital.
- Dependence on primary sector.
- Limited access to international markets.
- Informal economy.
- Capital flight.
- Indebtedness.
- Geography.
- Tropical climate and endemic disease.
- Weak institutional framework.
- Ineffective taxation structure.
- Ineffective banking system.
- Lack of property rights and land rights.
- Gender inequalities.
- Inappropriate governance.
- Corruption.
- Unequal political power.
- Unequal social class and status.
- Racial and ethnic issues.
- Political instability.
What are the economic barriers to economic growth and development? (11)
- Economic inequality.
- Lack of infrastructure.
- Limited access to appropriate technology.
- Low levels of human capital.
- Dependence on primary sector.
- Limited access to international markets.
- Informal economy.
- Capital flight.
- Indebtedness.
- Geography.
- Tropical climate and endemic disease.
What are the political and social barriers to economic growth and development? (11)
- Weak institutional framework.
- Ineffective taxation structure.
- Ineffective banking system.
- Lack of property rights and land rights.
- Gender inequalities.
- Inappropriate governance.
- Corruption.
- Unequal political power.
- Unequal social class and status.
- Racial and ethnic issues.
- Political instability.
What are poverty cycles?
Poverty leads to more poverty; spend all income on essentials; cannot save and invest in capital to support next generation.
Describe the poverty cycle. (6)
- Low incomes.
- Low savings.
- Low investment.
- Low physical, human and natural capital.
- Low productivity of labour and land.
- Low growth in incomes.
- REPEATS.
Why does poverty lead to poverty in the next generation?
Spend all income on essentials, cannot save and invest into education or healthcare.
What is required to break out the poverty cycle?
Government intervention.
What types of government intervention is required to break out the poverty cycle? (2)
- Investment in human, physical and natural capital.
- Ensure poor have access to credit.
Why is economic inequality a barrier to growth and development?
Greater equality increases capital and productivity, leads to economic growth.
Why is lack of infrastructure a barrier to growth and development?
Infrastructure has positive consumption externalities; increases productivity; contributes to development and growth.
What are some examples of infrastructure? (10)
- Power.
- Telecommunication.
- Internet.
- Water system.
- Sanitation.
- Sewerage.
- Dams/canals.
- Urban transport.
- Ports.
- Airports.
What is infrastructure?
Physical capital that comes from investments.
What are some reasons for a lack of infrastructure? (5)
- Problems of financing.
- Inadequate maintenance/poor quality.
- Limited access by the poor.
- Misallocation of resources.
- Neglect of the environment.
What is appropriate technology?
Technology that is satisfies economic, geographical, ecological and climate conditions.
What is an example of appropriate technology in developing countries?
Labour-intensive technologies; create more jobs, use local skills, increase incomes, poverty alleviation.
What is inappropriate technology?
Technology that DOES NOT SUIT economic, geographical, ecological and climate conditions.
What is an example of inappropriate technology in developing countries?
Capital-intensive technologies; displace workers; increases unemployment; reduce incomes; poverty; difficult skills.
Why is the lack of appropriate technology a barrier to growth and development?
Appropriate technology in developing countries would improve human capital.
What prevents the development of technology appropriate for developing countries?
Most innovation focuses in developed countries aim to make large profits; less incentive in developing countries.
What is human capital?
Skills, abilities and knowledge gained through healthcare and education that make workers productive.
What are some barriers to education? (9)
- Insufficient funding.
- Insufficient / untrained teachers.
- Insufficient classroom and facilities.
- Lack of teaching materials.
- Exclusion of disabled children.
- Gender discrimination.
- Distance of school from home.
- Hunger and malnutrition.
- Inability to pay for education.
Why is low levels of human capital a barrier to growth and development?
Low human capital limits productivity of workers, leading to unemployment, poverty and low incomes.
What are some barriers to good health? (8)
- Insufficient funding.
- Insufficient access to healthcare services.
- Private healthcare is expensive.
- Geographical access.
- Insufficient trained medical practitioners.
- Insufficient medical facilities and supplies.
- Unaccepting of modern medical practises.
- Insufficient access to clean water and sanitation.
What is the primary sector?
Primary commodities produced using land:
- Agriculture.
- Fishing.
- Forestry.
- Extractions (mining).
What is the problem of depending on the primary sector?
- Prices of primary commodities are volatile.
- More uncertainty; less investment.
- Unstable export earning.
Why is depending on the primary sector a barrier to growth and development? (3)
- Prices of primary commodities are volatile.
- More uncertainty; less investment.
- Unstable export earning.
Why do developing countries have limited access to international markets? (3)
- Goods produced by developing countries face high tariffs.
- High tariffs discourages manufacturing and diversification.
- Rich countries protect own agriculture industries.
Why is limited access to international markets a barrier to growth and development?
Producers from developing countries export lower quantities and make less revenue; leads to poverty and unemployment.
What is the formal economy?
Legal economy that is registered and regulated.
What is the informal economy?
Unregistered and unregulated illegal economy.
What is the informal economy for in developed countries?
Tax evasion, crime, corruption, illegal goods etc.
What is the informal economy for in developing countries?
Work for survival due to lack of opportunity in formal economy.
What are the problems with the informal economy? (2)
- Impacts government revenues.
- Less chance of education/training.
- No worker protection (exploitation, health hazards, no social protection.
Why is the informal economy a barrier to growth and development?
Impacts government revenues used to promote growth and development; impacts health and education.
What is capital flight?
Large-scale transfer of privately-owned financial capital to another country.
What causes capital flight?
Uncertainty/risk of holding assets domestically (increased tax, political instability, depreciation); transfer to stable economy.
Why is capital flight a barrier to growth and development? (3)
- Loss of potential domestic investment.
- Leads to depreciation.
- Uses foreign exchange; worsens external debt/balanc of payments problems.
Why is indebtedness a barrier to growth and development?
Government cannot afford to invest into capital/
What are the consequences of indebtedness? (3)
- Financial crisis.
- Debt trap.
- Increased taxes.
Why is geography a barrier to growth and development?
May have insufficient/low quality resources; must rely on neighbours for international trade; higher costs.
Why is tropical climate and endemic disease a barrier to growth and development? (2)
- Affects labour productivity.
- Impacts agriculture (livestock, soil, what can be grown).
What is an endemic disease?
Disease that is common in a population/region; usually preventable.
What may contribute to endemic disease? (6)
- Poor nutrition.
- Lack of healthcare/vaccination/medication.
- Lack of clean water.
- Limited sanitation.
- Pollution.
- Poor education regarding health.
What is an institutional framework?
Rules, organisational structure and social norms.
What is included in the institutional framework? (4)
- Legal system.
- Taxation structures.
- Banking system.
- Property rights.
Why is an inappropriate legal framework and lack of access to justice a barrier to growth and development?
Everyone must have access to justice; reduces poverty which is usually caused by disempowerment, discrimination etc.
Why is an ineffective taxation structure a barrier to growth and development?
Government tax revenues can be used for investment for growth and development (capital, infrastructure etc).
What are some common problems with taxation systems in developing countries? (3)
- High dependence on indirect tax.
- Inefficient (regressive).
- Corruption; wealthy influence tax policies
Why is an ineffective banking system a barrier to growth and development? (2)
Incentives to save for interest/access to credit; investment (in human capital; education/healthcare; poverty alleviation.
What are some common problems with banking systems in developing countries? (5)
- Low number of banks.
- Public ownership; inefficient, low competition, unproductive.
- Banks favour wealthier, larger borrowers (large firms).
- Influenced by politics and elites.
- Banks prefer large loans with collateral.
What are property rights?
Legal authority to own and use property/land.
Why is lack of property rights system a barrier to growth and development? (2)
- Investment into land is riskier.
- Cannot be used for collateral for loans.
Where may gender inequalities be present in an economy ? (5)
- Health.
- Education.
- Labour.
- Inheritance/property rights.
- Access to credit.
Why are gender inequalities a barrier to growth and development?
Less opportunities to be educated, work, gain property rights, have access to credit, make income and accumulate wealth.
What is governance?
Way of governing; use of power to manage resources in order to achieve particular objectives.