Notesale: Turn your study into money

Document Preview

Extracts from the notes are below, to see the PDF you'll receive please use the links above

---

ECONOMIC DEVELOPMENT
ECONOMIC DEVELOPMENT
ECONOMIC GROWTH

The process that leads to improved standard of living
and wellbeing for a population as a whole
A percentage increase in Real GDP



SOURCES OF ECONOMIC
GROWTH IN LEDCS

INSTITUTIONS

INSTITUTIONS WHICH MAY
CONTRIBUTE TO ECONOMIC
GROWTH

QUALITY OF CAPITAL
Need appropriate capital, not complicated
technology which you can’t work, v
...
reliant on it, leads
to corruption, foreign countries exploit it
The rules, organisations and social norms that facilitate
human co-operations
 EDUCATION SYSTEMS
 Improve quality of labour, shift LRAS and PPC
curve e
...
g
...
g
...
g
...
e
...
g
...
g
...
g
...
6% tariff on cocoa beans and 30
...

 Government selects a few industries it wants to
promote e
...
shoes – low skilled products and
industries, labour intensive
 Government puts protectionist measures on the
goods it wants to promote, e
...
subsidise the
shoe industry
 Or it uses supply side policies (Interventionist as
this was mainly done in socialist countries)
 E
...
g
...
g
...
g
...
g raw materials, seeds, fertilisers
BILATERAL AID
Between two countries
MULTILATERAL AID
Between multiple countries
Aid breaks poverty cycle if It is appropriate
If aid increases physical, natural and human
capital, will increase productivity, higher returns
and higher savings
Provides kick start money which government
doesn’t have, if government spend on public and
merit goods it will increase equality, economic
growth through increases in consumption and
investment
Provision of basic services, development in itself
Negatives of tied aid
Corrupt governments won’t allocate efficiently
Inappropriate aid will do more harm than good
Might not reach people in need – benefit some
not others, rural/urban etc
Aid is not persistent, no guarantee it’ll keep
coming
Long term concessionary aid will build up debts
Many governments use Aid as a substitute for
government spending therefore aid doesn’t
increase quantity of merit goods available
Questionable how much it helps when
developing countries still have to compete with
western protectionism – subsidies and products
Effectiveness depends on:
Type of aid
Short term/long term
Type of government
Appropriateness of aid
Non-profit, committed to reducing poverty
More likely to have a local presence and
understand local issues
More flexible and innovative
Local people trust them
Smaller, less economies of scale
Often don’t have support of governments e
...
g
...
g

---