6 Questions
What is the primary goal of economic development?
To improve the economic well-being and quality of life of a country's citizens
Which of the following indicators is used to measure life expectancy, education, and income?
Human Development Index (HDI)
According to the Linear Stages of Growth theory, how many stages of growth do countries progress through?
5 stages
Which strategy for economic development promotes domestic production of goods that were previously imported?
Import Substitution Industrialization (ISI)
What is the range of the Gini coefficient, which measures inequality?
0 to 1
Which theory argues that poor countries are exploited by rich countries, hindering development?
Dependency Theory
Study Notes
Economic Development
Definition
- Economic development refers to the process of improving the economic well-being and quality of life of a country's citizens, particularly in low-income countries.
- It involves sustained growth, structural change, and improvement in living standards.
Indicators of Economic Development
- Gross National Income (GNI) per capita: average income per person in a country.
- Human Development Index (HDI): measures life expectancy, education, and income.
- Poverty rate: percentage of population living below the poverty line.
- Inequality: measured by the Gini coefficient, which ranges from 0 (perfect equality) to 1 (perfect inequality).
Theories of Economic Development
- Linear Stages of Growth: Rostow's model, which suggests that countries progress through five stages of growth: traditional society, preconditions for take-off, take-off, drive to maturity, and high mass consumption.
- Structural Change: emphasizes the shift from agriculture to industry and services.
- Dependency Theory: argues that poor countries are exploited by rich countries, and that development is hindered by external factors.
Strategies for Economic Development
- Import Substitution Industrialization (ISI): promotes domestic production of goods that were previously imported.
- Export-Led Growth: focuses on exporting goods and services to stimulate economic growth.
- Foreign Direct Investment (FDI): attracts foreign investment to finance development projects.
- Human Capital Development: invests in education, healthcare, and training to improve labor productivity.
Challenges to Economic Development
- Institutional Barriers: weak governance, corruption, and lack of institutions hinder development.
- Resource Constraints: limited natural resources, infrastructure, and capital.
- Environmental Degradation: environmental degradation can be a major obstacle to sustainable development.
- Globalization: can lead to unequal distribution of benefits and increased income inequality.
Definition and Indicators of Economic Development
- Economic development is the process of improving the economic well-being and quality of life of a country's citizens, particularly in low-income countries.
- It involves sustained growth, structural change, and improvement in living standards.
- Indicators of economic development include:
- Gross National Income (GNI) per capita, which is the average income per person in a country.
- Human Development Index (HDI), which measures life expectancy, education, and income.
- Poverty rate, which is the percentage of population living below the poverty line.
- Inequality, measured by the Gini coefficient, which ranges from 0 (perfect equality) to 1 (perfect inequality).
Theories of Economic Development
Linear Stages of Growth
- Rostow's model suggests that countries progress through five stages of growth:
- Traditional society
- Preconditions for take-off
- Take-off
- Drive to maturity
- High mass consumption
Structural Change
- Emphasizes the shift from agriculture to industry and services.
Dependency Theory
- Argues that poor countries are exploited by rich countries, and that development is hindered by external factors.
Strategies for Economic Development
Import Substitution Industrialization (ISI)
- Promotes domestic production of goods that were previously imported.
Export-Led Growth
- Focuses on exporting goods and services to stimulate economic growth.
Foreign Direct Investment (FDI)
- Attracts foreign investment to finance development projects.
Human Capital Development
- Invests in education, healthcare, and training to improve labor productivity.
Challenges to Economic Development
Institutional Barriers
- Weak governance, corruption, and lack of institutions hinder development.
Resource Constraints
- Limited natural resources, infrastructure, and capital.
Environmental Degradation
- Environmental degradation can be a major obstacle to sustainable development.
Globalization
- Can lead to unequal distribution of benefits and increased income inequality.
Assess your knowledge of economic development, including its definition, indicators, and measures to improve a country's economic well-being and quality of life.
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