economic development Flashcards
(32 cards)
Protectionism advantages for economic development
increas tarrifs increase g on edu–increase sol
increase tarrif–increase import cost-increase demand for exports-domestic industires profit rise
increase i increase capital stock
Free trade advantages for economic development
No tarrifs lower m price for increase demand for iports-increase in manufactured goods–increase in quality of life
competition-(competinng with oversea firms
-increntive to cut cost-lower prices–increase affordability
MNCS will FDI in LEDC increase tech
freentrade disadvantages
icnrease comp
domestic firms outcompeted
shutdown such as uk textiles
lower profits
increase i
increase tech increase QOL
Tourism statistics
Total wrold GDP $110trn in 2024
Developmental Aid
funding for particular projects such as Schools Hospital
AId advantages
Increase cash –increase savings lower savings gap increase I
Increase Edu –Increase SOL
Harrod -Domar Model (Savings gap)
Increase in antional savings
increase banks q=liquidrt
ibanks have more to lend
increase borrowing
increase c+I
increase iincomes
increase savings
savings gap
savings needed to develop economy–currrent level of savings
policies to attract fdi
lower tarrifs
lower corporation tax
fall in interest rates
deregulation of trade unions
drawbacks of fdi
more wast e and pollution
outcompete local firms–mncs have large eoc
mcns gain monopsony power–lower wages
lower sol
mncs ma erelocate
losss of enterprise
capital replaes workers increase technological up
evaluating harrod domar model
in an ledc may not hav emany financial banks to save in
mcicrofinance
provisions of financial services
beenfits of microcredit
omcrrease access to credit increase incomes increase sol
increase incomes increase savings increase bank lending increase I increase capital stock
remittances
transfers of money from economic migrants to parent countries
remittances flows to devleoping countries rose to 647 bn
(8% increase from 2021)
benefits to remittances
can afford medicine school increase productivity
evaal:lower incentive to wrok
savings gap–shortfall between amount of saving needed to achieve a economic goal
increase incomes–increase savings fall ins avings gap
torusim
valued approximately 11.1 trn
benefits of tourism
increase tourism
increase employment
increase incomes
increase tourism in rease government revenue
aid
increase aid increase spending on infrastructure—increase health
over reliaint on foreign aid less incetnive to develop on their own
inrease cash icnrease savings less savings gap increase lend more
evaluate unlikely they can save
barriers to economic development
lack of propert right#
goverment corruption
brain drain
low quality human capital
lack of financial institutions
conflict
capital flight
savings gap
malnutrition
malnutrition(B)
lesss educable
less skills
less occupational mobility
lesss incomes
less sol
strategies–minimum market price
higher price
more farmers
more food
more nutritioin
brain drain (B)
disadvantages
loss of human capital fall in lras
fall in income tax
remittances from emigrants flow back
capital flight(uncertain and rapid movement of large sums of money out of a coutnry
increase supply of currency
currenct depreciates severely
fall in price of x
tfall in terms of trade
demand for x less than proportionale
icnrease in x revenue
causes capital flight
political turmoil
exchange rate uncertainty
fall in fdi into country
