Global Perspectivd Flashcards
What is HDI
Measure of economic development
-education : mean years of schooling
-health : average life expectancy
-income : real GNI per capita
Benefit of HDI
-takes in 3 factors important for economic development
-relatively easy to calculate as government collect statistics
Disadvantage of HDI
Issues with figures : health doesnt include quality of life and education
-no consideration of equality of income
What is the Multidimensional Poverty Index (MPI)
-% of pop that is multidimensional poor
-education : yrs of schooling and education
-health : mortality rate and nutrition
-standard of living : safe drinking water, electricity etc.
Disadvantage of MPI
-data not available so can’t be calculated for most countries
-environment not included
What’s the Genuine Progress indicator?
-26 indicators grouped as economic,environmental and social
-Aims to look at economic sustainability
-shows developed countries have negative growth overtime due to impact on the environment
What does the economic category tell us in the GPI
-personal consumption, inequality and cost of unemployment
What does the environmental category tell us in the GPI
-cost of pollution, CO2 emission, depletion of non-renewable resources
What does the social category tell us in the GPI
-value of volunteer work
-cost of crime
-value of parenting and housework
What’s the ECONOMIC FACTORS that affect growth and development?
-primary product dependency
-volatility of commodity prices
-saving gap
-capital flight
-demographic factors
-debt
-access to credit and banking
-infrastructure
-education/skills
Why does PRIMARY PRODUCT DEPENDENT influence GROWTH
-primary products like ‘mining’ and ‘agriculture’ can be wiped out by natural disasters so farmers are left with no income.
-They are ‘non-renewable’ and have a low YED : Prebisch Singer hypothesis says : LR prices of primary goods declined in proportion to m goods
Saudi Arabia and oil!!
Why does VOLATILITY OF COMMODITY PRICES influence GROWTH
-they are demand and supply inelastic so a Change in demand or supply leads to huge fluctuations
-producers incomes rapidly change increasing poverty and difficult to long term plan investment
Why does SAVING GAP influence GROWTH
-developing countries have less income so save less
-saving rate in Africa is 17% of GDP
-Harrod-Domar model : saving provides investment which is needed to improve capital which is low (excess labour) In developing countries so need capital to grow
Why does CAPITAL FLIGHT influence GROWTH
-money taken out of the country
-lack credit for consumers and investment
-due to lack of confidence in the economic stability or repatriation
-caused Argentina economic crisis in 2001!
Why does DEBT influence GROWTH
-1980s : developing countries borrows loans from developed countries : pay high interest repayments
-less money to spend on services and may need to raise taxes
-limiting growth and development
-NIGERIA DEBT is 52% of GDP
What are some Non-economic factors that affect growth
-corruption :take bribes and high level of bureaucracy is costly and time consuming
-poor climate and geographical terrain
-DISEASES such as HIV/AIDS
-Civil Wars
Market oriented strategies : limit gov intervention
-Trade liberalisation
-promotion of FDI
-removal of gov subsidies
-floating exchange rate started
-micro finance scheme
-privatisation
Trade liberalisation
-export led growth
-remove trade barriers and resources allocated to comparative advantage
-used by Singapore and S.korea
Promotion of FDI
-there’s a transfer of knowledge and create jobs leading to multiplier
-help fill the saving gap
-however it’s repatriated of profits and exploit developing countries
-environmental damage
-India saw 50% increase in FDI after liberalising FDI
Removal of Gov subsidies
-aim to minimise poverty
-but their subsidies are poorly targeted : given to people who aren’t poor and in need but produce necessities
-Inefficiency
-corruption and criminality : sold abroad illegally for a profit
-
Micro finance schemes
-give poor permanent access to financial services : insurance, loans
-no collateral and grant access to more loans if repaid
-S.Africa failed as they gave loans to people who couldn’t repay due to high unemployment and spend on consumption and increased informal activity
Privatisation
-efficient by increasing competition
-improve gov finance
-monopoly
-corruption by selling to a friend
Interventionist strategies
-Development of human capital
-protectionism
-managed exchange rate system
-infrastructure development
-buffer stock system
I : Development of human capital
-higher productivity
-overcome primary product dependency by developing manufacturing sectir
