economic development

• An increase in prices will increase nominal GDP, but this is measured in current dollars, thus includes inflations
• Food aid

  • Needed because poor farming methods produce insufficient food
  • Problem: Free food supplies can force farmers out of business
• Reasons For Low/Varying Economic Development

  • Over-dependence on agriculture
  • Domination on international trade by developed nations
  • Lack of capital
  • Insufficient investment in education, skills & Healthcare
  • Low levels of investment in infrastructure
  • Lack of efficient production and distribution systems
  • High population growth
  • Other factors like a corrupt govt. or war
• Human Development Index (HDI)


  • Used by the United Nations to make comparisons of human & economic development in different countries
  • Combines measures of standard of living, education, and life expectancy
  • Single index with a value between 0 and 1
  • Greater than 0.8 = high human development. Less than 0.5 = low human development
• Alleviating Poverty

  • Food aid
  • Financial aid
  • Tech aid
• Real Gross Domestic Product (GDP) Per Capita

  • GDP is the main measure of the total value of all goods and services produced in a given period of time
  • Real GDP Per Capita = Real GDP / Number of Population
• Tech aid

  • Needed because LEDCs lack access to modern machinery and equipment and knowledge of modern production methods
  • Problem: Most people lack the skill to use modern technology
• Standard of Living

  Refers to the social and economic well-being of the individuals in a country
• If the economy has an extremely rich person & everyone else is poor


  It brings up the Real GDP per capita
• Causes of Poverty

  • Unemployment
  • Low wages
  • Illness
  • Age
  • Poor Healthcare
  • Low literacy rates
  • High population growth
  • Poor infrastructure
  • Low FDI (Foreign Direct Investment)
  • High public debt
  • Reliance on primary sector output
  • Corruption and Instability
• Financial aid


  • Needed because LEDCs lack the capital to invest in an industrial base and modern machinery and infrastructure
  • Problem: Loans have to be repaid sometimes with interest
• Free food supplies can force farmers out of business
• LEDCs lack access to modern machinery and equipment and knowledge of modern production methods
• This may encourage LEDCs to borrow more money, or corrupt governments may misuse money
• Governments in LEDCs lack economic knowledge
• Varying Death Rates in MEDCs

  • Better food, housing, hygiene & high life expectancy
  • Fatty foods, smoking, and lack of exercise have increased rates of diabetes, cancer & heart disease
  • Improved medicine & healthcare; prevents many diseases & increased life expectancy
• Stage 4 of Demographic Transition Model

  • Low birth rate, low death rate, highest dependency ratio, longest life expectancy
• Stage 1 of Demographic Transition Model

  • High birth rate; high death rates; short life expectancy; less dependency (since there are few old people and children must work anyway)
• Relieving LEDCs of debt will allow them to use money for economic development instead
• Reasons for different population growth rates

  • Varying Birth Rates
  • Varying Death Rates
• Factors that affect population growth

  • Birth rate
  • Death rate
  • Net migration
  • Immigration & emigration
• Loans have to be repaid sometimes with interest
• Stage 3 of Demographic Transition Model

  • Declining birth rate, declining death rate, longer life expectancy, more dependency
• MEDCs will force down their price
• Farming methods can produce insufficient food
• Population Structure

  • The Demographic Transition Model
  • Population Pyramid: a type of graph that shows the age and sex structure of the country
• Varying Birth Rates in MEDCs

  • People marry later in life, so birth rates fall
• Varying Death Rates in LEDCs

  • Widespread diseases which lower life expectancy
  • Natural disasters, famines, wars
• Most people lack the skill to use modern technology; instead of using machinery, more jobs are needed to employ people
• LEDCs may have natural supplies that can be exported for money
• Varying Birth Rates in LEDCs

  • Large families to help produce food & work for money
  • High infant mortality rate
  • Low supply of contraceptives/forbidden to use them
• LEDCs lack the capital to invest in an industrial base and modern machinery and infrastructure
• Advice is not enough; LEDCs need more capital & stability
• Stage 2 of Demographic Transition Model

  • High birth rate; fall in death rate; slightly longer life expectancy; more dependency due to more elderly
• Living standards


  Refers to the factors that contribute to a person's well-being and happiness
• GDP (Gross Domestic Product)


  The output in an economy, used to measure living standards by calculating GDP per capita (GDP divided by population)
• Merits of using GDP to measure living standards

  • Indicates total production in the country
  • Includes population data
  • Calculated based on output, which indicates job creation
  • GDP data is readily available
• Limitations of using GDP to measure living standards

  • Does not consider how income is spent
  • Does not account for changes in technology
  • Does not reflect income distribution
  • Excludes unpaid work
  • Does not differentiate between positive and negative economic activities
  • Can be overstated due to technical errors
  • Does not consider all factors of well-being (leisure, health, education)
• HDI (Human Development Index)


  An alternative measure of living standards introduced by the United Nations, ranging from 0 (lowest) to 1 (highest)
• Components of HDI


  • Income index
  • Education index
  • Health index