4.3 Development

Question 1

Economic Development

Answer 1

Life sustaining goods and services- to increase the availability and widen the distribution of basic goods
Higher incomes- raising living standards, provision of jobs, better education
Freedom to make social and economic choices

Question 2

Advanced or Developed Economies

Answer 2

Industrialised, high tech, not focused on agriculture, low population growth, high GNI

Question 3

Developing economies

Answer 3

Reliant on agriculture
Low tech
High population growth
Reliant on aid
Possibly corrupt/ poor government

Question 4

Emerging Economies

Answer 4

Rapid economic growth
Increased investment
Manufacturing
High income growth
Inequality

Question 5

HDI

Answer 5

Human Development Index
Developed by the UN to identify the stage of development for economy

Question 6

3 Aspects of HDI

Answer 6

Knowledge- Mean years of schooling and the expected years of schooling
Long+ Healthy life- Calculated using a min value of life expectancy of 25 years and maximum value of 85 years
Decent Standard of living- Gross national income (GNI) per capita adjusted to PPP standard

Question 7

Advantages of HDI

Answer 7

Allows for comparisons between countries
Education and health are important also like GDP and so it provides the information along with infrastructure and opportunities

Question 8

Disadvantages of HDI

Answer 8

Doesn’t consider human rights, gender equality or peoples cultural identity
Does not take into account the environment
Doesn’t consider distribution of income

Question 9

Economic Factors influencing development

Answer 9

Dependency on one product
Savings gap- household income was low so savings are hard to make
Lack of foreign currency- weak currency so cannot afford to import tech Potential investment is diverted to other countries

Question 10

Other factors influencing development

Answer 10

Geography
Demographic
Debt
Access to credit
Infrastructure
Education/ Skills
Lack of property rights
Political instability
Corruption

Question 11

Ways to increase LRAS

Answer 11

Labour supply increasing
Capital- investment
Efficiency of allocation of resources e.g. shifting resources from rural to urban areas
Advancements in tech
Improvements in institutions like the banking system

Question 12

Market based strategy to promote development

Answer 12

By promotion of enterprise and trade e.g. trade liberalisation, trade blocs, FDI

Question 13

Interventionist strategy to promote development

Answer 13

Gov interventionist led to improve aggregate supply and infrastructure e.g. protectionism, managed exchange rates

Question 14

Advantages of Market orientated strategies

Answer 14

Increased…
Trade
Entrepreneurship
Market efficiencies
Efficient allocation of resources

Question 15

Disadvantages of Mkt orientated strategies

Answer 15

Inequality
Danger of monopolies
Policies will not improve health, education or infrastructure
Increased prices

Question 16

Adv of Interventionist strategies

Answer 16

Can directly spend on weak areas of economy
Prices and wages can be controlled
Inflation controlled
Gov borrowing can be used to increase investment into the economy

Question 17

Disadv of interventionist strategies

Answer 17

Inefficient gov/ gov failure
Too much gov borrowing
Crowds out private sector
Possible inflation due to printing money