haecON: IB 4 Development

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Sloman economics blog development

Measuring Growth and Development

Distinguish between economic growth and economic development.
Explain the multidimensional nature of economic development in terms of reducing widespread poverty, raising living standards, reducing income inequalities and increasing employment opportunities.

Distinguish between GDP per capita figures and GNI per capita figures.
Compare and contrast the GDP per capita figures and the GNI per capita figures for economically more developed countries and economically less developed countries.
Distinguish between GDP per capita figures and GDP per capita figures at purchasing power parity (PPP) exchange rates.
Compare and contrast GDP per capita figures and GDP per capita figures at purchasing power parity (PPP) exchange rates for economically more developed countries and economically less developed countries.
Compare and contrast two health indicators for economically more developed countries and economically less developed countries.
Compare and contrast two education indicators for economically more developed countries and economically less developed countries.

Composite indicators

Explain that composite indicators include more than one measure and so are considered to be better indicators of economic development.
Explain the measures that make up the Human Development Index (HDI).
Compare and contrast the HDI figures for economically more developed countries and economically less developed countries.
Explain why a country’s GDP/GNI per capita global ranking may be lower, or higher, than its HDI global ranking.

biological indicators dataset

International development goals

Outline the current status of international development goals, including the Millennium Development Goals.

Robert Kennedy How GDP failed. University of Kansas, March 18, 1968

"Even if we act to erase material poverty, there is another greater task, it is to confront the poverty of satisfaction - purpose and dignity - that afflicts us all.

Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things. Our Gross National Product, now, is over $800 billion dollars a year, but that Gross National Product - if we judge the United States of America by that - that Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage.

It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children.

Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.

And it can tell us everything about America except why we are proud that we are Americans. If this is true here at home, so it is true elsewhere in world."

What makes up well being? (ONS)

Common characteristics of economically less developed countries

Explain, using examples, that economically less developed countries share certain common characteristics (noting that it is dangerous to generalize as there are many exceptions in each case), including low levels of GDP per capita, high levels of poverty, relatively large agricultural sectors, large urban informal sectors and high birth rates

Explain that in some countries there may be communities caught in a poverty trap (poverty cycle) where poor communities are unable to invest in physical, human and natural capital due to low or no savings; poverty is therefore transmitted from generation to generation, and there is a need for intervention to break out of the cycle

Diversity among economically less developed nations

Explain, using examples, that economically less developed countries differ enormously from each other in terms of a variety of factors, including resource endowments, climate, history (colonial or otherwise), political systems and degree of political stability.

Sources of Growth for LEDC's

Explain that the most important sources of economic growth in economically less developed countries include increases in quantities of physical capital and human capital, the development and use of new technologies that are appropriate to the conditions of the economically less developed countries, and institutional changes.

Explain the relationship between economic growth and economic development, noting that some limited economic development is possible in the absence of economic growth, but that over the long term economic growth is usually necessary for economic development (however, it should be understood that under certain circumstances economic growth may not lead to economic development).

Domestic factors and economic development

With reference to a specific developing economy, and using appropriate diagrams where relevant, examine how the following factors contribute to economic development.

a. Education and health
b. The use of appropriate technology
c. Access to credit and micro-credit
d. The empowerment of women
e. Income distribution

Domestic Factors and Economic Development

International trade and economic development

Trade problems facing many economically less developed countries

With reference to specific examples, explain how the following factors are barriers to development for economically less developed countries.

a. Over-specialization on a narrow range of products
b. Price volatility of primary products
c. Inability to access international markets

HL Only

With reference to specific examples, explain how the
following factor is a barrier to

development for economically

less developed countries.

a. Long-term changes in the terms of trade

listen to ‘Copper mining in Zambia: the winners and losers’ on audioBoom

Trade strategies for

economic growth and

economic development

With reference to specific examples, evaluate each of the following as a means of achieving economic growth and economic development.

a. Import substitution
b. Export promotion
c. Trade liberalization
d. The role of the WTO
e. Bilateral and regional preferential trade agreements
f. Diversification

Foreign direct investment and multinational corporations (MNCs)

Describe the nature of foreign direct investment (FDI) and multinational corporations (MNCs).
Explain the reasons why MNCs expand into economically less developed countries.
Describe the characteristics of economically less developed countries that attract FDI, including low cost factor inputs, a regulatory framework that favours profit repatriation and favourable tax rules.

Advantages and disadvantages of FDI for economically less developed countries

Evaluate the impact of foreign direct investment (FDI) for economically less developed countries.

Foreign direct investment, net inflows (BoP, current US$)

Data from World Bank

Foreign aid

Watch WE THE ECONOMY - The Foreign Aid Paradox on Vimeo.

Explain that aid is extended to economically less developed countries either by governments of donor countries, in which case it is called official development assistance (ODA), or by nongovernmental organizations (NGOs)
Explain that humanitarian aid consists of food aid, medical aid and emergency relief aid.
Explain that development aid consists of grants, concessional long-term loans, project aid that includes support for schools and hospitals, and programme aid that includes support for sectors such as the education sector and the financial sector.
Explain that, for the most part, the priority of NGOs is to provide aid on a small scale to achieve development objectives.
Explain that aid might also come in the form of tied aid.
Explain the motivations of economically more developed countries giving aid.
Compare and contrast the extent, nature and sources of ODA to two economically less developed countries.

Evaluate the effectiveness of foreign aid in contributing to economic development.
Compare and contrast the roles of aid and trade in economic development

Aidflows Website

Multilateral development assistance

The roles of the International Monetary Fund (IMF) and the World Bank

Examine the current roles of the IMF and the World Bank in promoting economic development

Foreign debt

Foreign debt and its consequences

Outline the meaning of foreign debt and explain why countries borrow from foreign creditors.
Explain that in some cases countries have become heavily indebted, requiring rescheduling of the debt payments and/or conditional assistance from international organizations, including the IMF and the World Bank.
Explain why the servicing of international debt causes balance of payments problems and has an opportunity cost in terms of foregone spending on development objectives.
Explain that the burden of debt has led to pressure to cancel the debt of heavily indebted countries.

Debt Relief for Poorer Countries from tutor2u

The balance between markets and intervention

Strengths and weaknesses of market-oriented policies

Discuss the positive outcomes of market-oriented policies (such as liberalized trade and capital flows, privatization and deregulation), including a more efficient allocation of resources and economic growth.
Discuss the negative outcomes of market-oriented strategies, including market failure, the development of a dual economy and income inequalities.

Strengths and weaknesses of interventionist policies

Discuss the strengths of interventionist policies, including the provision of infrastructure, investment in human capital, the provision of a stable macroeconomic economy and the provision of a social safety net.
Discuss the limitations of interventionist policies, including excessive bureaucracy, poor planning and corruption.
Explain the importance of good governance in the development process.
Discuss the view that economic development may best be achieved through a complementary approach, involving a balance of market oriented policies and government intervention.