3.2 Factors influencing growth & development

Question 1

Restrictions on growth?

Answer 1

1) PPD
2) Dutch disease
3) Prebisch-Singer
4) Harrod-Domar
5) Lack of access to finance

Question 2

What is PPD?

Answer 2

When a country over-depends on a singular product for their economy

Question 3

What is the dutch disease?

Answer 3

Describes negative impact of a country finding a new valuable resource via appreciation
– could lead to premature de-industrialisation

Question 4

What is the Prebisch-Singer Hypothesis?

Answer 4

Believes that the global price of commodities will rise at a slower pace that manufactured goods prices – worsens ToT
EV: Seen that manufactured goods prices recently fallen

Question 5

What is the Harrod-Domar Model?

Answer 5

Model that emphasises importance of savings for finance (lack of savings = lack of growth)
EV: Too simplistic (doesn’t consider factors on saving)

Question 6

What is lack of access to finance?

Answer 6

A key point in lack of growth is a lack of access to loans or banking
EV: Microfinance (e.g. Bangladesh)

Question 7

Ways to reduce PPD?

Answer 7

• Diversification
• Higher taxes of profits
• Sovereign Wealth Fund (e.g. Norway)