IGCSE Economics-Economic Development

IGCSE Economics

Economic Development

Open Ended

What do you understand by the concept of Economic Development

(Do not ask Dr Google!)

What was GDP again?

Review-Economic Growth

Gross domestic product (GDP) is
the total monetary or market
value of all the finished goods
and services produced within a

country's borders

Multiple Choice

What is GDP

• Gross development production

• General developed place

• Generally developed population

• Gross domestic product

GDP-Add to your notes!

What is GDP again?

How is it calculated?

What are the problems with how it is calculated?

How do we measure living Standards?

Standards of Living-

What about an increase in Real GDP? Will

that raise living standards?

Other Measures (HDI and Index of

Sustainable Economic Welfare)

Multiple Choice

The Difference between Economic Growth and Economic development are ......

• Economic development is single dimension for example economic activities, & economic growth is multiple dimension (social, environment & politic)

• Economic growth is possible without development & economic development is gradual & steady change

• Economic development is single dimension & economic growth is qualitative change (all sectors)

• Development relate to growth of human capital indexes & economic growth focus on product

Poll

In Economic Development we use the term standards of living...What do you think it means?

• what are the standards of life-DNA

• Who carries the flag for our country

• Standard of living is the level of income, comforts and services available

• something to do with GDP

What do we think Economic Development is?

An increase in a nations living standards...

Multiple Choice

What is economic development defined as?

• An improvement in economic stability

• An increase in the output of an economy and an increase in the economy's productive potential

• An improvement in economic welfare

• Development of the economy

Open Ended

In your notes and on here add in as many 'things' as you can think of that might be classified as being part of our standard of living (quality of life).

If you need to ask Dr Google please have had three ideas yourself first

Multiple Choice

Which of the following is not a measure of Living Standards?

• GDP - Gross Domestic Product

• WHI - World Happiness Index

• HDI - Human Development Index

• GPI - Genuine Progress Indicator

Criticisms of using GDP as a measure of the
Standard of living

GDP does not take into account the degree of income
inequality...examples-add to notes

GDP does not take into account harmful effects of
production-externalities etc-add to notes

GDP between country comparisons are difficult as they
will have different costs, currencies and even ways of
calculating GDP.-add to notes

Standard of living doesnt mean quality of life-rather things that add to our quality of life

Multiple Choice

What is most likely to cause an increase in a country's living standards?

• A fall in the retirement age

• A fall in the school leaving age

• A rise in education and training

• An increase in pollution levels

Fill in the Blank

We can measure Economic Development using a Human Index

Multiple Choice

A developing country will typically have a

• Lower standard of living

• Higher standard of living

Multiple Choice

Development is about...

• Building large cities

• People getting richer

• Improving peoples quality of life

• Making people happier

Multiple Choice

Why might real GDP per head rise and yet living standards fall?

• Levels of pollution may have risen

• The size of the informal economy may have risen

• Working conditions may have improved

• Income may be more evenly distributed

The HDI:-Human Development Index

Measured
between 0
and 1

Find out the HDI for three developing countries of your choosing...are they the same? why/why not?

Multiple Select

Select 2 more components that the HDI considers.

• The % of population who are literate (can read and write)

• How many people own mobile phones

• Life expectancy

• how many babies people have

• The continent people live on

How?

However...

-Doesnt take into account the impact on the
environment.

-Can be a big difference between regional HDI and
national HDI values

What
about
the HPI?

Multiple Select

The Human Development Index (HDI) is an indicator of how developed a country is. Select the 2 components that the HDI considers.

• How many cars people have.

• How many people have access to water

• How many people have enough food to eat

• How many people have access to safe drinking water

• How many people get ill

Multiple Choice

Human Development Index is...

• the average number of years a person is expected to live.

• a tool for ranking countries based on their level of economic development.

• how much humans develop over time.

Multiple Choice

Which of the following is NOT taken into account in the Human Development Index

• Education

• Income

• Literacy Rate

• Environmental Standards

Human Poverty Index (HPI)

Used also by the UN this is a measure of human
deprivation (something is missing, and the situation is
serious).

Proportion of population below a poverty line.

Where does
Malaysia
rank on
the HPI?

Poverty?

Multiple Choice

What is meant by 'absolute poverty'?

• An income level that is insufficient to meet basic needs

• An income level that is less than 25% of the national average

• A lack of any income

• A lack of any wealth

Make sure you have in your notes-definitions of poverty and examples from real life

Multiple Choice

What is being described here?

A condition where people are poor and their income is too low to enjoy the average standard of living in their country.

• Relative Poverty

• Absolute Poverty

• Vicious Cycle of Poverty

Multiple Choice

What could cause an increase in relative poverty but a decrease in absolute poverty

• The income of the rich rising by less than the income of the poor

• The income of the rich rising by more than the income of the poor

• The income of the rich falling by less than the income of the poor

• The income of the rich falling by more than the income of the poor

Multiple Choice

A country has a lower real GDP per head than another country but also a smaller percentage of people living in absolute poverty. What could explain this?

• The country has a lower rate of inflation

• The country has a lower population

• The country has a more even distribution of income

• The country has more people employed in the primary sector

​Can you see any connections between these numbers-write some in your notes

Poverty...

Poverty is a condition that exists when people lack
adequate income and wealth to sustain a basic standard
of living.

Many Governments have the reduction of poverty a key
macroeconomic objective.

Poverty will cause numerous ongoing issues-what might
they be?

Multiple Choice

Which level of development is a country where most people work at the subsistence level?

• More Developed

• Newly Industrialized

• Less Developed

Multiple Choice

Which of the following is NOT a policy measure to reduce poverty?

• Improving the quality of education

• Introducing a national minimum wage

• Reducing unemployment benefits

• Encouraging more MNCs to set up in the country

Multiple Choice

What may promote both economic growth and economic development?

• A more uneven distribution of income

• Improved education of the poor

• Increased output of heavy polluting firms

• Increased tax on company profits

Multiple Choice

Which government measure may reduce absolute poverty?

• A decrease in government expenditure on education

• Increased subsidies on low-cost housing

• Increase in interest rates

• Imposition of a tax on food

Causes of Poverty Summary-

1. Unemployment or underemployment-why?
2. Old Age-how? Why?
3. Ill Health-how/why?
4. Lack of social welfare payments-why?
5. Lack of Education-how/why?

Let’s
solve it!

ISEW

A Deeper dive into the HDI and the data it tells us

The HDI takes into account income, education and life expectancy. With children, on average, attending school for fewer years, it is possible that the HDI might fall despite life expectancy increasing.

Watch the video clip-make notes on what has happened to global HDI and why

A Deeper dive into a discussion on Poverty

If, on average, income is lower but it is more evenly spread, there may be fewer people in absolute poverty.

Make notes on what has happened to East Asias contribution to absolute poverty numbers

What has really been happening with the HDI-with poverty around the world, over time?

How does Education impact on poverty?

Improved education of the poor should raise their skills. This should increase their choices, job opportunities and the quality of their lives. It should also increase the output of the country.

Make some notes on education levels in different countries vs their HDI level

Problems of measuring development

While GDP provides a somewhat limited measure of

economic growth and living standards, it does have the

advantage of being fairly easily obtained and is based

on three variables only - income, expenditure and

output.

In contrast to this, as can be seen

from the HDI, and ISEW,

development is a multi-dimensional,

complex process which can only be

judged against a variety of criteria,

using composite indices.

This may give rise to various problems

involving subjective, value judgments. For

example, how should factors such as life

expectancy and literacy be weighted within

an index? Which factors should be included

and which should be excluded?

So while the HDI, for example, may provide a

fairly sophisticated indicator of living

standards, it omits some very important

components, such as environmental quality;

but to construct a development index which

is all-embracing would be a statistically

awesome task!

GII-Gender Inequality Index

What about other
Countries?

Your Turn...

Look up countries Happy planet index scores...are there
any that surprise you? why?

Summary-make sure you have answers to these in your notes!

There are a number of ways to measure standards
of living

Real GDP per capita gives an indication of living
standards but not a full picture-what is not included?

One country may have higher Real GDP per capita but
the population have lower living standards?-why? Explain

International comparisons are difficult-why-explain

Trickle Down theory

What has actually happened!

What about now?

Distinguishing Countries...

Economically Less Developed-GNI per Cap less than
$975USD (LEDCs or LDCs)

Lower Middle Income Countries-GNI per cap
$976-$3855 (LMICS)

Upper Middle Income Countries-GNI per cap
$3856-$11905 (UMICs)

Economically More Developed Countries-GNI >$11906

Common Characteristics. Of developing countries..

1.Low levels of GNI per cap

2.

High Levels of Poverty (Extreme and Moderate Poverty)

3.

Relatively large Agricultural Sector

4.

Large Urban Informal sector

5.

High Birth rates-implications for Dependency ratios

6.

Low levels of health and education

7.

Low levels of productivity

8.

Dual Economies-two extremes exist within an economy at the same
time (very wealthy and very poor)

That’s
common!

Are all Developing
countries the same?
What differences
might there be?

World’s Most Livable city

1. Melbourne Australia

2. Vienna Austria

3. Vancouver Canada
4. Toronto Canada
5. Calgary Canada

6. Adelaide Australia

7. Helsinki Finland
8. Perth, Australia

9. Auckland New Zealand

Group think...PEQ-Include these PEQ as part of your revision of this topic

1. Outline why GDP per capita can be used as

an indicator of standards of living? (2)

2. Explain why you might want to include

environmental issues in measuring
standards of living (4)

3. Does Economic growth always result in

higher standards of living (7)

Group Research-Poverty Cycle

What is the Poverty Cycle?

What causes the Poverty cycle?

How can it be transmitted over
generations?

How might a country break the cycle?