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Economic Growth and Development - Coggle Diagram
Economic Growth and Development
definitions
economic growth: an increase in real national income/ national output
economic development: an improvement in the quality of life and living standards
eg measures of literacy, life expectancy and healthcare
economic growth would generally enable economic development as more can be spent on education and healthcare
measures of development
real income per head (GDP per capita)
levels of literacy and education standards
levels of healthcare
quality and availability of housing
levels of environmental standards
life expectancy
the HDI: human development index - measurement of improvements in living standards
knowledge: educational components
long and healthy life
standards of living
characteristics of less-developed economies
relatively low incomes per capita and low levels of savings
low absolute levels of productivity
large share of the population living in rural areas
high dependency on export incomes from commodities
limited support by a welfare system
distance from technology
large informal sector (farming)
relatively fast population growth
rapid urbanisation
weaknesses in infrastructure
weaknesses in institutions such as the government
relatively higher tariffs and import control
lower access to advanced country markets
factors affecting economic developement
levels of infrastructure: transport and communication
education: significant influence on labour productivity
levels of inward investment: attracting MNCs
levels of savings/capital: higher savings enable a virtuous circle of increased investment
political stability: encourage/discourage firms investing in developing economies
macro stability: encourage investment and development
labour mobility: movement between productive industries
foreign aid: improve infastructure and living standards
natural resources: use for development
free trade vs protectionism
tourism
barriers to growth
infrastructure gaps
primary export dependency
macro instability
conflict and corruption
human capital weakness
savings and currency gap
natural capital depletion
inequality of income and wealth
lack of competition in markets
inadequate human capital
lack of property rights
policies to promote economic growth and development
improve education and human capital
providing a basic welfare safety net
FM - protectionisim
FM - competitve devaluation of the currency
develop core infastructure
support micro finance iniatives
FM - attract FDI
attract inward remittances
attract skilled migrants
external debt relief
fairtrade schemes for local producers
promote tourism
anti-corruption policies
FM - privatisation and deregulation
open economy
foreign aid
bi-lateral: from one country to another
multi-lateral: through international bodies
project aid
humanitarian aid
debt relief
how does aid help development?
helps overcome the savings gap
fast-forrward investment
long term health and education projects
add around 0.5% to growth
criticism
poor governance
lack of transparency
dependency culture
distort market forces
interventionist policies and government failure
political self interest
policy myopia (quick fixes)
regulatory capture
information failure
disincentive effects
high enforcement costs
conflicting objectives
damaging effects of red tape