2.4.2 Developed, emerging & developing economies

Question 1

Indicators of growth (there’s 3 on here)

Answer 1

1. GDP per capita
2. Literacy and health
3. Human Development Index (HDI)

Question 2

What is GDP per capita

Answer 2

1. Is the value of
   total GDP/ population of the country.
   - Capita is another word for ‘head’, so it essentially measures the average output per person in an economy.
   - This is useful for comparing the relative performance of countries.

Question 3

Disadvantages of GDP

Answer 3

1. GDP does not give any indication of the distribution of income.
2. GDP may need to be recalculated in terms of purchasing power, so that it can account for international price differences.
3. There are also large hidden economies, such as the black market, which are not accounted for in GDP.
4. GDP gives no indication of welfare.

Question 4

How is purchasing power determined

Answer 4

By the cost of living in each country, and the inflation rate.

Question 5

Literacy & health:

Answer 5

1. Shows how successful government policies have been.
2. Life expectancy can be used to give information about education and health.
3. The literacy rate is the proportion of adults who can read and write.

Question 6

Human Development Index (HDI):

Answer 6

1. It measures economic and social welfare of countries over time.

• The components of HDI are education, life expectancy and standard of living, measured by real GNI at purchasing power parity (PPP) per capita.

Question 7

The education component of HDI shows

Answer 7

The statistics of the mean number of years of schooling and the expected years of schooling.

Question 8

The life expectancy component of HDI uses

Answer 8

A life expectancy range of 25 to 85 years.

Question 9

The standard of living component of HDI measures

Answer 9

GNI (gross national income) adjusted to PPP per capita.

Question 10

Advantages of using HDI

Answer 10

1. Allows for comparisons between countries to be made, based upon which countries are generally more developed than other countries. It provides a much broader comparison between countries than GDP does.

Question 11

Disadvantages of HDI

Answer 11

1. Doesn’t consider the distribution of income. A country could have a high HDI but be very unequal. This can mean many people might still be in poverty.
2. Doesn’t take the environment into account.
3. Doesn’t consider how free people are politically, their human rights, gender equality or people’s cultural identity.

Question 12

The 3 types of economies

Answer 12

1. Developed economies
2. Developing economies
3. Emerging economies

Question 13

Characteristics of Developed economies:

Answer 13

Developed economies have high levels of economic growth & have stable economies.

• Long life expectancies
  High income per capita
• High levels of education
  • Slow population growth per year
• Low mortality rates
• Low birth rates
• Urban & city populations are large
• A dominant industrial sector & weaker agricultural sector

Question 14

Characteristics of Developing economies:

Answer 14

• Low life expectancies
• Low or middle incomes
• High mortality rates
• High dependency ratio
  Low GDP
  Fast population growth
• Low levels of education, which results in low levels of productivity Poor standard of living
  Poor nutrition, lack of access to clean, safe drinking water and a lack of sanitation
• Poor or absent health care provision
• Low savings rate

Question 15

Characteristics of Emerging economies:

Answer 15

1. The BRIC economies are emerging markets, which is comprised of Brazil, Russia, India & China.

• They are characterised by their fast growth & their recent industrialisation.
  They are moving away from agriculture.
  They have significant influence in global affairs and all four nations are part of the G20.
  They rely heavily on industry: manufactured & engineered goods make up a lot of their exports
  There is a lot of potential for innovation, particularly in renewable energy (Brazil 3”°, Russia 5, India 6 & China 1 in the world)
• They are all seeing a considerable increase in demand for a higher standard of living. This is driven by the growing M/C in India & China who are demanding more goods & services, such as mobile phones.

Question 16

How can the average income in a country be calculated

Answer 16

By both the mean and the median

Question 17

What is the mean income of the country

Answer 17

total income of an economy (GDP) / the number of people of working age in the country (the population).

Question 18

What is the median income

Answer 18

The ‘middle value’ of all incomes in a country