poor education constraints on growth and development

    Cards (30)

    • Poor education

      Leads to a fall in the skills and therefore decreases human capital
    • Decrease in human capital
      Leads to a fall in the productivity of a work force
    • Fall in productivity

      Leads to leftward shift in the LRAS
    • Leftward shift in LRAS

      Limits real GDP and therefore limits economic growth
    • Chain of reasoning

      1. Low human capital
      2. Low productivity
      3. Keeps LRAS to the left
      4. Limits real GDP
      5. Limits economic development
    • Low incomes

      Government unable to collect much income tax revenue
    • Less income tax revenue

      Government has less money available to invest in development
    • Lack of funds to invest in

      • Healthcare to avoid diseases like Hepatitis B, Diphtheria and Measles
    • Improve education

      1. People receive a better education
      2. Leave school with higher human capital
      3. Have the knowledge and skills to make them more productive workers
    • Increase in productivity

      Shifts the long-run aggregate supply curve to the right
    • Shift in LRAS to the right
      Increases real GDP and economic growth
    • Higher productivity

      Increases workers' incomes
    • Increase in workers' incomes

      Workers pay more income tax
    • Increase in income tax revenue

      Government receives more revenue to spend on development
    • Chain of reasoning

      1. High human capital
      2. Higher productivity
      3. Shifts LRAS to the right
      4. Increases real GDP
      5. Increases economic development
    • Investing in education

      Interventionist policy for development, as the government is actively intervening in the market
    • Building schools in remote areas

      Children move from working on the farms to being in school
    • Children no longer able to help families on the farm
      Families produce less
    • Decrease in production

      Decrease in incomes
    • Decrease in incomes
      Decrease in consumption
    • Decrease in consumption

      Decrease in aggregate demand
    • Decrease in aggregate demand

      Decrease in real GDP and therefore limit economic growth
    • Low standard of education

      Students will not acquire the knowledge or skills they need
    • Low human capital

      No significant increase in worker productivity
    • Lower productivity

      Shifts the long-run aggregate supply curve to the left
    • Shift in LRAS to the left

      Decrease in real GDP and therefore decrease economic growth
    • Lower productivity

      Workers' incomes will decrease
    • Decrease in workers' incomes

      They will pay less income tax
    • Less income tax revenue

      Government receives less revenue to spend on development
    • Chain of reasoning

      1. Low human capital
      2. Low productivity
      3. Low incomes
      4. Less income tax revenue
      5. Less government spending on development
      6. Limits real GDP
      7. Limits economic development
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