4.3.2 Factors influencing growth and development

• What factors influence growth and development?

  • Education/skills
  • Infrastructure
  • Access to credit and banking
  • Debt
  • Demographic factors
  • Foreign currency gap
  • Savings gap
  • Volatility of commodity prices
  • Primary product dependency
  • Non economic factors
  • Poor government
  • Civil wars
  • Corruption
  • Absence of property rights
• What is the primary product dependency?

  Occurs in countries where the value of production of primary products accounts for a large proportion of GDP, exports and employments
• What are the broad types of commodities?

  Broad types of primary products:

  • Hard commodities
  • Soft commodities 
• What are hard commodities?

  Those that are mined or extracted
• What are soft commodities?

  Those that are usually agricultural goods
• What are issues with primary product dependency?

  • Extreme price fluctuations
  • Fluctuations in producers revenue resulting from price fluctuations
  • Fluctuations in foreign exchange earnings
  • Protectionism
  • Shortages of supplies for domestic consumption
  • Finite supplies of hard commodities
  • Appreciation of the currency
  • Falling terms of trade
• What is the age dependency ratio?

  Ratio from those within the working age to those outside the working age
• What are reasons for Africa's young median age?

  • High infant mortality rate
  • High fertility rate
  • High levels of adolescent child bearing
  • Limited access to and low affordability of contraception
• What are benefits of rapid population growth?

  • Increase in work force which can increase LRAS and shift PPF outwards
  • Encourage economies of scale in production and increased capital investment spending by businesses
  • Widening on the tax base
  • Population growth and urbanisation can lead to benefits from agglomeration economies
  • Catalyst for research and development and innovation in farming designed to increase crop yields
• What is agglomeration economies?

  Refers to the benefits that firms and industries gain from locating near each other in a concentrated geographic area
• Where do agglomeration economies arise from?

  • Arise from the clustering of economic activity and can lead to increased efficiency, innovation and economic growth
• What are risks of rapid population growth?

  • Created challenges in providing sufficient jobs in the formal economy to prevent a large increase in youth unemployment
  • Holds back the annual growth per capita incomes
  • Increasing pressure on natural environment
  • Rural-urban migration can lead to problems associated with urban density such as crime, the spread of disease and increased inequalities of income and wealth.
• What is replacement fertility?

  Level of fertility at which a population exactly replaces itself from one generation to the next
• What is old age dependency ratio?

  The old age dependency ratio is the ratio of the number of elderly people as a share of those of working age
• What is a super aged society?

  A super-aged society is one with people aged 65 years and older accounting for more than 20 percent of the total population
• What are negative consequences of a super aged society?

  • Rise in age dependency ratio
  • Increase in spending in age related fiscal costs
  • Possible rise in shortage of labour
  • Possible slowdown in labour productivity
  • Higher savings
  • Diversion of saving 
• What are positive consequences of a super aged society?

  • Increased demand for housing and specialist health care
  • Increased consumers spending on leisure and travel and other spending associated with older aged groups
  • People can work productively at an older age
  • Bring experience to their jobs
  • Social benefits 
• What are policies to address an ageing/declining population?

  • Increase the labour market participation rates
  • Raise the state retirement age
  • Policies to tackle gender discrimination at work
  • Introducing auto enrolment