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4.1.1: Growing Economies - Coggle Diagram
4.1.1: Growing Economies
UK Growth compared with Emerging Economies
How growth is measured:
Growth rate is measured by comparing the annual changes in a countries
Gross domestic product
.
GDP: The total value of goods produced and services provided within a time period.
An emerging economy:
Economies that have a high growth rate but low income per person. E.g. India, China and Brazil
UK growth is generally lower than emerging economies.
This is partly due to the fact that emerging economies have a fast growing manufacturing sector.
UK businesses are increasingly outsourcing their manufacturing to emerging economies because of lower labour costs and cheaper raw materials.
China
, for example, is the worlds largest manufacturing economy and exporter of goods. China's economic growth rate is consistently higher than the UKs.
Emerging economic power in the developing world
Globalisation and its effects
Globalisation is the economic integration of different countries, through lower barriers to cross - border movement of people, goods, services, technology and finance.
Globalisation has been rapid in the past 20 years, which has grown economic power of less developed countries.
Globalisation has impacted national cultures, spread ideas, and speeded up industrialisation in developing nations.
Emerging powers of the world can be classified with the BRIC and MINT abbreviation. The emerging powers are:
Brazil
Russia
India
China
Mexico
Indonesia
Nigeria
Turkey
Impacts of economic growth
On businesses
Potential increase in profits
as businesses enter new markets + gain customers
Reduced cost of production
as businesses can utilise lower labour costs and cheaper raw materials in emerging economies
Increased investment
Increased opportunities for trade as demand for goods + services increases.
On people
Reduced unemployment: there is more demand, which requires more labour to increase output.
More tax revenue is generated = increased quality of public services.
Increased incomes from rising employment, which increases standards of living,
Indicators of growth: businesses consider these factors when deciding which markets to expand into.
GDP per Capita
Total output of a country divided by number of people
Higher GDP = Higher standard of living
Can be useful to compare the growth in two countries.
Health
Important for businesses that want to invest in emerging economies, as this will have an impact on their quality of workforce.
Indicators of Health:
Life expectancy
Infant Mortality Rate
Access to healthcare + clean water
Literacy
The percentage of adults within an economy who can read or write.
Literacy is an important factor to consider when reasoning economic growth. OECD's 2016 international adult literacy survey identifies differences in literacy account for 55 of the differences in economic growth.
Literacy rates can determine the quality of workforce + the customers they will be selling to.
HDI
Combines life expectancy, education, and income to determine the quality of development of citizens in a country.
Created by the UN and measured 0 - 1
Drawback:
Overlooks inequality by averaging all citizens. There is also a lack of reliable data in some countries.