Leaving Cert Economics: Economic Growth & Development

Economic Growth & Development

• Definitions:

  • Developed Countries: High standards of living, high GDP, good healthcare, education, infrastructure. Examples: Austria, Canada, Norway.
  • Developing Countries (LDCs): Low HDI, high poverty, inadequate resources. Examples: Afghanistan, Chad.

• Characteristics of LDCs:

  • High population growth stressing services.
  • Frequent famine and food insecurity.
  • High foreign debts impacting investment.
  • Wealth inequality, small home markets limiting competition.
  • Low educational opportunities contributing to unemployment.
  • Poor living conditions and inadequate infrastructure.

• Profiling Countries:

  • Income: Measured by GDP or GDP per capita.
  • Wealth: Determined by assets minus liabilities.
  • Equality: Assessed via Gini coefficient.

• Economic Growth vs Economic Development:

  • Economic Growth: Increase in GNP per capita without structural changes.
  • Economic Development: Structural changes alongside GNP per capita increase.

• Factors Inducing Economic Growth/Development:

  • Fiscal policy: Tax cuts and increased government spending to stimulate economy.
  • Education: Investment in education boosts workforce productivity.
  • Foreign Direct Investment (FDI): Attracting FDI creates jobs and boosts productivity.
  • Trade Relationships: Expanding trade increases market opportunities.
  • Monetary Policy: Lowering interest rates to encourage borrowing and investment.
  • Research & Development: Funding innovation to boost productivity.

• Benefits of Economic Growth:

  • Job creation leading to improved living standards.
  • Increased government fiscal health due to higher tax revenues.
  • Improved balance of payments with export-led growth.
  • Attraction of migrants to fill labor market gaps.

• Costs of Economic Growth:

  • Potential inflation due to increased demand.
  • Resource depletion with unsustainable growth.
  • Labor shortages causing increased wage costs.

• Factors of Production:

  • Land: Natural resources used in wealth production.
  • Labour: Human effort contributing to goods and services.
  • Capital: Tools and equipment enhancing production efficiency.
  • Enterprise: Willingness to take risks in production ventures.

• Impact of Factors of Production on Growth:

  • Land allows for agricultural growth and real estate.
  • Labour generates value and tax revenue.
  • Capital enhances productivity through technology and investment.
  • Enterprise employs resources effectively to drive economic progress.