4.1.1 Growing Economies

• The growth rate of a country is measured by the annual change in its gross domestic product (GDP).
• Emerging economies

  Economies that have increasing growth rates but relatively low income per head (per capita)

  Eg India, China
• Why emerging economies grow faster than UK

  • Growth of manufacturing sector is higher en emerging economies because of lower labour costs and access to raw materials.
• • Globalisation is the economic integration of different countries through increasing freedoms in the cross-border movement of people, goods/services, technology & finance
• • The integration of global economies has impacted national cultures, spread ideas, and speeded up industrialisation in developing nations
• BRICS

  • Brazil
  • Russia
  • India
  • China
  • South Africa
• MINT

  • Mexico
  • Indonesia
  • Nigeria
  • Turkey
• Emerging economies have a growing middle class with increasing incomes which allows their citizens to spend more on domestic goods and imported goods from abroad.
• Increasing income = increases the profitability of international firms who sell their goods and services in these emerging economies 
• Economic growth helps to generate income in a country 
• The Impact of Economic Growth on Businesses 

  • new markets = new customers = increased profits.
  • Customers are likely to have income elastic demand = increased sales/profits.
  • Reduced costs of production - business benefits from lower labour costs from cheaper raw materials.
  • Increased trade opportunities - demand increases.
  • Increased investment - As economy grows, business wants to expand so likely to invest. May be increase of FDI .
• The Impact of Economic Growth on Individuals

  • Reduced unemployment - more demand=more labour = more output.
  • Increased average income - individuals have rising income due to employment = increases standard of living.
  • Access to quality public service - more tax revenue generated - government improve quantity & quality of public services.
• Four key indicators of growth

  1. GDP
  2. Literacy
  3. Health
  4. Human Development Index (HDI)
• Indicator of growth - GDP

  • Calculated by dividing total output of a country by the total number of people in a country.
  • High GDP = High standard of living.
  • Important to review GDP per capita over time to see growth.
  • Can be useful to compare growth between countries.
• Indicators of growth - Health

  • Important to businesses that want to invest in emerging economies - this will have impact on quality of workforce.
  • Key indicators = average life expectancy, infant mortality, access to health care/clean water.
• Indicators of growth - Literacy

  • Refers to percentage of adults within an economy who can read/write.
  • Determines the quality of the workforce & the customers they will be selling to.
• Indicators of growth - HDI

  •  Combines the factors of life expectancy, education and income to determine the quality of development of citizens within a country.
  • It was created by the United Nations and is measured between 0-1 (1 being the highest)
• Problems of using HDI

  • It does not account for inequalities within a country
  • There is a lack of reliable data in some countries
• • Human Development Index (HDI)  combines the factors of life expectancy, education and income to determine the quality of development of citizens within a country.