Economic Development Flashcards
Economic growth
Increase in real output (GDP)
Economic development
Process that leads to better standards of living
Barriers to development
- Poverty
- Economic Barriers
- Political/Social Barriers
Types of poverty
Relative poverty
Absolute poverty
Absolute poverty
Inability to meet basic needs like food, shelter
Relative poverty
Living below the customary standard of living, relatively impoverished
Development poverty cycle
Low education/little healthcare -> Low income -> Low productivity -> Low levels of human capital -> Low education/little healthcare
Growth poverty cycle
Little growth in economy -> Low income -> No Savings -> No investment -> Little growth in economy
Capital flight
The rich moving large amounts of funds out of the economy
Types of infrastructure
Transport: Roads railway, airports, etc
Public Utilities: Electricity, gas, water supply, etc
Public Services: Police, education, health, fire, etc
Communication: Postal systems, telecommunication
Informal markets
- Lower tax revenues
- Workers tend to be unprotected
Into the bucket
- FDI
- Export oriented businesses
- International aid
Out of the bucket
- Imports
- Capital flight
FDI
Cross-border investment in which an investor resident in one economy establishes a lasting interest in and a significant degree of influence over an enterprise resident in another economy.
Reasons for capital flight
- Safety of domestic financial institutions
- Corruption
- Currency instability
