economic development
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- Classification of Economies
Level of Development:
Developed economies: High standards of living, advanced infrastructure, and diversified industries.
Developing economies: Lower income levels, less industrialization, and often higher poverty rates.
Emerging economies: Rapid industrial growth, improving income levels, moving towards development.
Level of National Income:
Low-income economies: Limited economic resources and low national income.
Middle-income economies: Transitional economies with growing industries and incomes.
High-income economies: High national income and GDP per capita.
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- Indicators of Living Standards and Economic Development
Real per capita national income statistics:
Income adjusted for inflation, providing a measure of the average income per person.
Purchasing Power Parity (PPP):
Adjusts income for the cost of living differences across countries.
Non-monetary Indicators:
Health (life expectancy, access to healthcare).
Education (literacy rates, school enrollment).
Housing and access to clean water.
Composite Indicators:
Human Development Index (HDI): Combines income, education, and life expectancy to provide a holistic measure of development.
Multidimensional Poverty Index (MPI): Looks at multiple deprivations in health, education, and standard of living.
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- The Kuznets Curve
Definition:
Shows the relationship between economic development and income inequality.
Shape:
Inverted U-shape: As economies grow, inequality rises initially but decreases after reaching a certain level of development.
Implications:
Indicates that rapid growth may lead to short-term inequality but long-term improvement in living standards.
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- Economic Growth Rates and Living Standards
Comparing Growth Over Time:
Use real GDP growth rates to assess how economies evolve.
Analyze long-term trends in growth and how they affect living standards.
Comparing Between Countries:
Use growth rates, PPP-adjusted income, and HDI to compare levels of development between countries.
Examine disparities in wealth, health, and education between countries of different income levels.