Economic growth

Economic growth - Economic growth when a nation experiences...

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Sheet1 Page 1 when a nation experiences an increase in Real GDP per capita Economic development M a qualitative measure of overall wellbeing that includes numerous factors such as literacy rates, life 3 statistics that allow for economic development comparisons: 1 HDI ± consists of 3 equally weighted variables: life expectan c Michael Todaro± s 3 key objectives of development: 1. increased availability and improvement in the distribution of life sustain DIFFERENCES BETWEEN RICH AND POORT NATIONS 1. Effective GovDt institutions: good governance usually refers to a well performing economy. Many MDCs have basic things s 2. Excessive Regulation: these regulations are similar to bribes. These are regulations placed by the gov- t upon businesses o 3. Human Capital: LDCs get caught into a trap, if there are few skilled workers, then there is less incentive for other to invest i n 4. Geography: climate plays a part in the income distribution of the world. MDCs are usually located outside the tropics, most o 5. Responsible fiscal and monetary policy: many LDCs get into trouble when they consistently overspend on areas that do no t 6. Democracy: many LDCs suffer due to politics and the lack of democracy. Minor agriculture disturbances become severe as m 7. Property Rights: Developed world is full of example of informal property rights. They are like a barter INSTITUTIONAL AND POLITICAL BARRIERS TO GROWTH Infrastructure: Transport (roads, railways, airports), Public utilities (electricity, gas, water supply, sewers), Public services (poli c - If goods cannot be transported, then trade and growth is restricted - If power supplies are unreliable then production is harmed - If communication channels are poor or non-existent then the ability to coordinate economic activity is severely limited. POVERTY CYCLES - In LDCs incomes are very low - Most, or all, of one± s income is spent on consuming basic necessities. MPC is very high. Thus savings are low (MPS is low ) - Very low funds available in banks for borrowing (capital investment) - Very little $ available for entrepreneurs or businesses to start, expand a business - Productivity levels stay low - In LDCs incomes are very low - Access to education and health care are limited because they are not free - The population has poor health and low levels of knowledge -Productivity levels stay low TRADE RELATED BARRIERS TO GROWTH + DEVELOPMENT
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Economic growth - Economic growth when a nation experiences...

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