Economic growth and development

• What is economic growth?

  Increase in a country’s real national output
• What causes economic growth?

  Increases in quality or quantity of production factors
• What does economic development refer to?

  Living standards, freedom, and life expectancy
• How is economic development different from economic growth?

  It covers moral aspects and sustainability
• What are characteristics of LEDCs?

  • Low life expectancies
  • High mortality rates
  • High dependency ratio
  • Low GDP
  • Fast population growth
  • Low levels of education
  • Poor standard of living
  • Poor nutrition and sanitation
  • Poor health care provision
• What does HDI stand for?

  Human Development Index
• What are the components of HDI?

  Education, life expectancy, and standard of living
• How is the standard of living measured in HDI?

  Real GNI at purchasing power parity per capita
• What was the average world HDI in 1970?

  0.48
• What does a high HDI value indicate?

  A high level of economic development
• What are the limitations of using HDI?

  It does not consider political freedom or income distribution
• What are the advantages of using HDI?

  • Allows for country comparisons
  • Broader than GDP comparisons
  • Highlights education and health factors
  • Indicates government policy success
• What does HPI stand for?

  Human Poverty Index
• What does HPI-1 measure?

  Poverty in developing countries
• What does HPI-2 measure?

  Poverty in developed countries
• What does the GDI measure?

  Relative inequality between men and women
• What are market-oriented strategies?

  • Measures to make the economy more free
  • Minimum government intervention
  • Includes trade liberalization and FDI promotion
• What is trade liberalization?

  Trading without protectionist barriers
• What is FDI?

  Flow of capital for lasting interest
• What is the effect of removing government subsidies?

  Distorts price signals in the market
• What is a floating exchange rate system?

  Value determined by supply and demand
• What is microfinance?

  Borrowing small amounts for enterprises
• What is the impact of microfinance on borrowers?

  Increases incomes and reduces dependency
• What is the significance of high repayment rates in microfinance?

  Indicates borrower reliability and trust
• What does privatization mean?

  Transfer of assets from public to private sector
• What is the goal of developing human capital?

  Improve skills and productivity in the economy
• What is protectionism?

  Measures to protect domestic industries
• What is the purpose of managed exchange rates?

  Combine fixed and floating exchange rate systems
• What is infrastructure development?

  Improvement of physical structures like transport
• What is the Lewis model?

  Explains transition from agriculture to manufacturing
• What does the Lewis model assume about labor?

  Surplus of unproductive labor in agriculture
• What happens to wages in the manufacturing sector according to the Lewis model?

  Wages are fixed and attract agricultural workers
• What is the outcome of profits in the manufacturing sector?

  Invested into more fixed capital for business
• What is the effect of increased demand for labor in manufacturing?

  Increases productive capacity of firms
• What are the factors that affect growth and development?

  • Market-oriented strategies
  • Interventionist strategies
  • Other strategies like industrialization
• What are the implications of buffer stock schemes?

  • Reduce price volatility in agriculture
  • Stabilize farmers' incomes
  • Ensure consumer welfare
  • Face challenges like financial resources and storage
• What are the benefits of promoting joint ventures?

  • Access to international trade
  • Transfer of technological knowledge
  • Open new markets for small firms
  • Spread risk in product development
• What are the challenges of infrastructure development in India?

  • Poor irrigation systems
  • Regular power cuts
  • Need for $400 billion investment
  • Impact on food grain production
• What are the consequences of high investment in infrastructure in China?

  • Improved power and telecommunications
  • Boosted employment through construction
  • Development gap with other economies
  • Opportunity cost of not investing elsewhere
• What are the implications of microfinance in Bangladesh?

  • 95% of microfinance cohorts are women
  • Helps borrowers gain financial independence
  • Reduces dependency on exploitative loans
  • Stimulates employment through SMEs