Question Bank - Answers.pdf - Unit 1 Measuring development and the economic performance of LDCs 1 Identify and explain the key differences between

Question Bank - Answers.pdf - Unit 1 Measuring development...

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Page 1 of 39 Unit 1 Measuring development and the economic performance of LDCs 1. Identify and explain the key differences between developed and developing countries (10) 2016-6 1.1 HDI Index High HDI developed (DC) Low & med less developed (LDC) Low least developed 1.2 Population growth higher in LDC (not explained by HDI) Incomplete demographic transition from high birth- & death-rates to low birth & death rates Population growth more rapid in LDC because death rates have dropped to near levels of DCs, but birth rates have not Key factor in bringing down death rates was control of major infectious disease Fostered by international agencies high incomes of LDC not required Birth rates high because of high nr of children per women NOT high women of childbearing age Consequence of high birth rate: population much younger 1.3 Higher proportion of labour force engaged in agriculture (LDC) (Not explained by HDI) Tendency of poor households to spend higher fraction of income on food Tendency of poor countries to export cash crops in exchange for manufactures Productivity in agriculture smaller in LDC High agricultural labour force share not automatically associated with low incomes, poor health & lack of education Yet, even in DC difficult & expensive to provide adequate schools in rural areas Thus, high agric labour force share associated with low life expectance & educational attainment even controlling for level of capita income Negative causal relationship from agric work & rural location to healthcare & education. 2. Differentiate between the different measures of development and evaluate their usefulness. Problems of gdp per capita (10) 2016-6 difference between pqli and hdi (10) 2016-1 why the HDI is the preferred measurement of development and how it is formulated (10) 2017-6 3. 3.1 Per capita income, measured in USD Countries are ranked by World bank 2002: o < $736 Low income o > $9 075 High income o Between: Middle income Low & middle Less developed. High More developed GDP: total final outputs of G&S produced within country territory by residents & non-residents
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Page 2 of 39 GNI = GDP + factor incomes accruing to residents from abroad income earned in domestic economy accruing to non-residents GNI per cap is the correct measure of income per head, but GDP per capita is often easier to estimate Per capita income is average over all residents in country can obscure important regional differences 3 major problems with this measurement: 1) Purchasing power of USD greater in poor countries GDP per capita in USD gives exaggerated differences in average standard of living between rich and poor countries 2) Per capita GDP is “one dollar, one vote” average. Even if majority poor, rich minority can raise GDP per capita 3) Per capita GDP does not measure well-being. May have same GDP/c, but health , education etc. may differ 3.2 Physical Quality of Life Index (PQLI) Direct measure of extent to which the basic needs of population were being met
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