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What is meant by the term economic development?
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What is meant by the term economic development?
Economic development is the sustainable increase in living standards for a country, characterised by increases in life expectancy, education levels and income.
What is the Human Development Index (HDI)?
The Human Development Index (HDI) is a composite indicator, developed by the United Nations, that combines measures of health, education and income to calculate a country's level of development.
What are the three indicators used in the HDI?
The three indicators used in the HDI are
health (life expectancy at birth)
education (mean years of schooling and expected years of schooling)
income (real gross national income per capita at purchasing power parity).
True or False?
A HDI value of 0.800 or higher is considered very high development.
True.
A HDI value of 0.800 or higher is considered very high development.
What is the inequality adjusted HDI (IHDI)?
The inequality-adjusted HDI (IHDI) is a measure that adjusts the HDI value downward based on the level of inequality present in the country.
What is the multi-dimensional poverty index (MPI)?
The Multi-dimensional Poverty Index (MPI) tracks deprivation across health, education and living standards. It identifies households as poor if they suffer deprivations across one or more of the weighted indicators.
What are single indicators of development?
Single indicators of development are individual measures that can be used to assess a country's level of development. For example, the number of doctors per 1000 people or the percentage of adult labour in agriculture.
How is the HDI score calculated?
The HDI score is calculated by combining equally weighted measures of health, education and income. This creates a score between 0 and 1.
What does a HDI value of less than 0.550 indicate?
A HDI value of less than 0.550 indicates low development.
State one advantage of using the HDI for comparing countries.
One advantage of using the HDI for comparison is that it is a composite indicator which provides a more useful comparison metric than single indicators do.
What is one limitation of the HDI?
One limitation of the HDI is that it does not measure the inequality that exists as it uses the mean GNI per capita.
How does the IHDI differ from the HDI?
The IHDI differs from the HDI by adjusting the measurement for inequality. The IHDI will fall below the HDI value as inequality rises.
What is meant by primary product dependency?
Primary product dependency is an economic factor where a country relies heavily on extracting raw materials or agricultural products. This can limit growth because of low added value, income inelastic demand and price volatility.
How does the volatility of commodity prices affect development?
The volatility of commodity prices affects development by causing fluctuations in incomes and the GDP for countries dependent on commodity exports. This is because these commodities tend to be price inelastic for both demand and supply.
What is a savings gap?
A savings gap is the difference between the level of savings in an economy and the level of investment needed for economic growth. It is used in the Harrod-Domar model.
What is capital flight?
Capital flight is the rapid outflow of money or assets from a country. This could be caused by political upheaval, economic sanctions, war or changes to government policy.
How do demographic factors influence growth and development?
Demographic factors influence growth and development by affecting the dependency ratio. This affects the amount of money available for savings and investment. A country with an ageing population will have a higher dependency ratio.
What is the impact of poor infrastructure on development?
Poor infrastructure increases business costs, deters foreign direct investment, reduces the geographical mobility of labour and makes it difficult to increase economic activity.
True or False?
Education and skills have no impact on economic growth.
False.
Education and skills have a significant impact on economic growth by increasing human capital and productivity.
How does corruption affect economic growth and development?
Corruption affects economic growth and development by diverting funds intended for investment. This leads to lower levels of investment and an inefficient allocation of resources.
What is the impact of wars on economic development?
Wars destroy infrastructure, disrupt supply chains and often reduce the post-war supply of labour. This shifts the production possibility curve inward and reduces economic development.
How does political instability affect economic growth?
Political instability affects economic growth by causing regular changes in policies and priorities. This reduces confidence and certainty in the economy, deterring investment.
What is a foreign currency gap?
A foreign currency gap is a shortage of foreign currency reserves in a country. This can be caused by oil price fluctuations, debt repayments or capital flight.
What impact does a country's geography have on its development?
Geography influences development by affecting transportation costs, access to markets and natural resource availability. Landlocked countries often face higher costs and challenges, especially when exporting.
What are market-orientated strategies?
Market-orientated strategies are approaches that use the price mechanism for private individuals and firms to pursue economic activity.
Define trade liberalisation.
Trade liberalisation is the removal or reduction of the restrictions on free trade of goods and services between countries.
What is a buffer stock scheme?
A buffer stock scheme is an interventionist strategy where primary products are bought and stored when supply is plentiful then sold when supplies are low. This is used to stabilise prices.
How does foreign direct investment (FDI) contribute to growth?
Foreign direct investment contributes to growth by increasing output, employment and income through the inflow of capital and expertise from foreign owned companies.
What is the Lewis model of industrialisation?
The Lewis model of industrialisation describes economies as having two sectors. These are rural agricultural and urban industrial. It argues for a transformation towards the more productive industrial sector.
How can the development of tourism contribute to economic growth?
The development of tourism can contribute to economic growth by providing employment, generating revenue and increasing income, especially in countries with natural or cultural attractions.
What is the purpose of Fairtrade schemes?
The purpose of Fairtrade schemes is to bypass trade restrictions and connect ethical buyers directly with farmers in developing countries. Buyers choose to pay higher prices to support the development of value-added products.
True or False?
Debt relief can hinder economic development.
False.
Debt relief can aid economic development by freeing up resources that would otherwise be used for debt repayment. This allows countries to invest in infrastructure, education and welfare systems.
What is the role of the World Bank in economic development?
The role of the World Bank in economic development is to provide loans to assist with infrastructure projects, economic reform and trade liberalisation.
How do non-governmental organisations (NGOs) contribute to development?
Non-governmental organisations (NGOs) contribute to development by engaging in small-scale projects, drawing on local skills, encouraging sustainability and addressing environmental issues using local knowledge and resources.
What is the primary function of the International Monetary Fund (IMF)?
The primary function of the International Monetary Fund (IMF) is to facilitate a stable global financial system. It oversees exchange rates, monitors economic developmentsand provides financial assistance to member countries.
What does the strategy of providing microcredit involve?
Microcredit is a strategy that provides small loans to individuals who lack access to traditional banking services. This helps to break the poverty cycle and promote entrepreneurship.