Questions and Answers
How does development economics differ from economic growth?
What does Sen emphasize as a key aspect of development?
Which of the following is NOT typically considered a dimension of development?
What is a common goal of economic development across different countries?
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Which index is commonly used to measure economic growth?
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What is often recognized as the main indicator of a country's level of economic development?
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Why is calculating productive use of capital challenging for economists?
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Which of the following is considered insufficient on its own for development?
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Which of the following best defines economic growth in the context of economic development?
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How does the resource curse theory explain the political dynamics in resource-rich countries?
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What are the three key ingredients of economic development?
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What role does the Global Competitiveness Index (GCI) play in assessing economic development?
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In what way does a knowledge-economy contribute to sustainable competitive advantage?
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Which factor is noted as a significant obstacle to development in poorer countries?
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What impact does corruption have on businesses globally, according to the data provided?
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Which type of political system is suggested to enhance quality of life?
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How do authoritarian political systems generally compare to democratic systems in terms of conflict and quality of life?
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What impact does ethnic diversity have on trade?
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What significant effect do demographic variables like urbanization have on quality of life?
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What is a criticism of the Human Development Index (HDI)?
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What is one reason critics argue against the equal weighting of components in the HDI?
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How does military spending relate to economic growth based on historical data?
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What aspect of economic and social life does the HDI exclude from its measurement?
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Why is access to the internet considered an important component of development?
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Study Notes
Introduction to Development Economics
- Development Economics examines economic progress within societal, political, and cultural contexts.
- It encompasses more than economic growth; development requires both social and economic progress.
- Economic growth alone does not guarantee development; freedom and removing barriers are essential according to Amartya Sen.
Meaning of Development
- Development transcends increased average income, incorporating education, poverty alleviation, inequality, and unemployment.
- Recognized as a multi-dimensional process, development involves economic, social, and environmental changes.
- Non-economic dimensions are critical in addressing development challenges.
Goals of Economic Development
- Development priorities differ between countries; common goals include increasing national wealth, improving well-being, and ensuring freedom.
Measurement of Development
- Common metrics for economic growth include GNP per capita and GDP per capita.
- A country’s development success relies more on how effectively resources (physical, human, natural capital) are utilized than on resource quantity alone.
Views on Economic Development
- Economic development consists of three interrelated components: economic growth, quality of life, and human development.
- Economic growth measures quantity, while quality of life and human development emphasize qualitative aspects.
- The Human Development Index (HDI) measures aspects of human development, while the Quality of Life Index (QLI) reflects subjective well-being.
Knowledge and Resource-based Economies
- Knowledge economies prioritize ideas and knowledge as driving forces for growth and productivity.
- Resource-based economies rely primarily on natural resources but may experience a resource curse, hindering democratization.
Role of Savings and Investment
- High saving rates correlate with economic growth; governments often promote tax-exempt saving schemes.
- Limited new capital formation in poorer nations poses a significant development constraint.
Case Study: Asian Tigers
- The rapid development of Hong Kong, South Korea, Taiwan, and Singapore involved export-oriented industrialization prevalent during the 1970s and 80s.
Impact of Corruption
- Corruption raises the global cost of business by up to 10%, affecting overall economic development.
Global Competitiveness Index (GCI)
- The GCI assesses institutions, policies, and factors that influence medium-term economic prosperity.
- Politically democratic systems with market economies generally enhance quality of life compared to authoritarian regimes.
Ethnic Diversity and Trade
- Ethnic diversity can enhance trade through the establishment of ethnic networks, while demographic factors heavily influence quality of life.
Military Spending
- Excessive military expenditures relative to economic capacity can divert resources from growth and enhance quality of life.
- Historical data indicate a correlation between military spending and economic growth between 1950 and 1965.
Human Development Index (HDI)
- Introduced in 1990 by the UNDP, the HDI evaluates development in income, health, and education.
- The HDI allows for tracking longitudinal changes in countries' development levels annually, with themes affecting development included in reports.
Critiques of the HDI
- The HDI does not capture intra-country development disparities, like those between urban and rural areas.
- Critics point out the arbitrary equal weighting of components and the exclusion of freedom-related aspects (e.g., internet access).
- The HDI fails to indicate income distribution and omits many factors like crime, corruption, and negative externalities impacting development.
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Description
This quiz covers the foundational concepts of Development Economics, including its definition and differentiation from economic growth. It explores the societal, political, and cultural implications of development, emphasizing the necessary conditions for achieving it. Engage with the critical perspectives of noted economists like Amartya Sen to deepen your understanding.
