The Widening Development Gap EQ3 Flashcards
(37 cards)
How has globalisation led to “an explosion in inequality”?
-Critics of globalisation assert that ‘the rich get richer while the poor get poorer’
-The result is an ‘explosion in inequality’ at a time when 1 billion people still live on less than $1.25 per day.
-This indicates that development gap extremities (the range of values between the world’s richest and poorest people and countries) have increased.
Has globalisation led to an increased development gap?
Globalisation has led to increased development in some countries, but has also widened the gap between rich and poor in some cases (both between countries and within countries)
What’s an example of how globalisation can be seen between countries?
E.g.
In 2015 people in Luxembourg had incomes of $105,000 per year compared with only $220 in South Sudan
What’s an example of how globalisation can be seen within countries?
E.g.
In China’s coastal cities incomes per capita are over $10,000 whereas in the rural west they are under $2,000
How can development indicators show how globalised a country is?
-Development indicators reveal a country’s level of globalisation by measuring economic, social, and technological integration.
-High GDP per capita, trade, and foreign direct investment indicate strong economic ties.
-Social factors like internet access, migration rates, and cultural imports reflect global connectivity and influence.
What is a single indicator?
-they measure one variable e.g. life expectancy or GDP per capita and are easy to understand
- they are not very comprehensive so may not always give an accurate representation
What are composite indicators?
-they combine more than one variable to a single measure e.g. HDI or GII
What is GDP per capita?
-It is an economic and single indicator
-measure the average income per person in a country
What are the positives of using GDP per capita?
-provides a simple and quick measure of a country’s economic strength, making international comparisons easier. E.g.the UK and Germany both have high GDP per capita, indicating strong economies compared to lower-income countries like Chad
-Helps governments and organisations assess economic growth and plan policies for development. For example, if a country’s GDP per capita is increasing, policymakers may invest in infrastructure and job creation to sustain growth.
What are the negatives of using GDP per capita?
•It is an average figure that does not reflect income inequality or wealth distribution, meaning a country can have a high GDP per capita while many citizens still live in poverty. E.g. in oil-rich Qatar, GDP per capita is high, but many migrant workers earn very little and live in poor conditions.
•It does not take into account environmental damage or sustainability. E.g., China’s rapid economic growth has led to high GDP per capita but has also caused severe pollution and deforestation.
What is economic sector balance?
-it is an economic and single development indicator
-Economic sector balance shows how jobs and production are spread across three main industries: farming (primary), factories (secondary), and services like retail and finance (tertiary).
What are the positives of using economic sector balance?
•it provides insight into a country’s stage of development: E.g., in Chad, a large part of the population is employed in agriculture (primary sector), showing it is still in an early stage of development.
•Shows how diversified a country’s economy is, highlighting contributions from different industries. E.g., the UK has a strong service sector (finance, education, healthcare), while China has a large manufacturing sector, contributing to their economic strengths.(this can help policy makers understand where to invest their to shift more jobs from agriculture to industry for example)
What are the negatives of economic sector balance?
•It can be difficult to classify economies today, as technology-driven jobs do not always fit into traditional sectors. E.g., gig economy workers like Uber drivers or social media influencers do not clearly belong to primary, secondary, or tertiary sectors.
•Ignores important social and environmental factors. E.g., a country might have a booming industrial sector, but cause severe pollution
What is GDP?
-an economic, single indicator
-GDP is an annual measure of goods and services
What are the positives of using GDP?
-Provides a clear measure of a country’s economic activity and growth. E.g., if the UK’s GDP increases, it suggests businesses are producing more, employment is rising, and the economy is expanding.
-Governments use GDP data to shape economic policies. E.g., if GDP growth slows, policymakers may invest in infrastructure to expand economy
What are the negatives of using GDP?
-Does not show income inequality. E.g., India’s GDP is large, but a significant portion of the population lives in poverty, so GDP alone does not reflect wealth distribution.
-Does not account for environmental damage
What is GNP (gross national product)
-an economic, single indicator
-measures the total economic output produced by a country’s factors of production, no matter where they are located.
What are the positives of using GNP?
*Reflects the overall income generated by a country’s citizens and businesses, regardless of location. E.g.if a German company operates factories in China, the profits made from those factories contribute to Germany’s GNP, not China’s.
What are the negatives of using GNP?
*Less commonly used than GDP, making comparisons more difficult. E.g., policymakers and economists generally prefer GDP because it focuses on domestic production.
What is GNI (gross national income)?
-GNI is a single economic indicator
-it is similar to GNP but includes net income earned abroad (such as wages, profits, and remittances) while subtracting income paid to foreign entities.
What are positives of using GNI?
•Provides a better measure of a country’s actual income than GDP. E.g., a country with a large amount of foreign investment may have a high GDP, but if most of that income leaves the country, its GNI will show a more accurate picture of national wealth.
•Helps track the impact of remittances. E.g., in Nepal, remittances from workers abroad make up a large share of national income, so GNI better represents economic well-being than GDP.
What are the negatives of using GNI?
•Not as useful for countries with low foreign investments or remittances. E.g., a country that does not rely on foreign earnings will have a GNI very similar to its GDP, making the measure less significant.
What is Purchasing Power (PPP) GDP per capita and why is it important?
-it has become a popular way of comparing economic development between countries as it unlike nominal GDP it takes into account the cost of living between countries as well
-This provides a more accurate comparison of real economic well-being and helps compare actual living standards
-e.g.The nominal GDP of China is lower than the USA’s, but China’s PPP GDP is actually higher. This means that although China’s economy is smaller in dollar terms, its citizens can buy more goods and services with their income compared to Americans.
What is nominal GDP?
Nominal GDP is the total value of all goods and services produced in a country measured at current market prices, without adjusting for inflation or differences in cost of living
