| What is Infrastructure? | -Refers to the Basic Facilities and Services Needed for the Nation and the Economy to Function |
| Give Examples of Infrastructure | -Roads
-Schools
-Water Supplies
-Sewerage
-Railways
-Hospitals
-Electricity Supplies
-Internet Services |
| Why can Poor Infrastructure harm the Economy? | -Firms and Factories may be Unable to Operate Efficiently (Roads are Bad, Energy is Unreliable, Railways broken)
-Hard to move Goods around or Out of the Nation (Poor Roads, Railways, Ports, Airports..)
-Firms hard to Coordinate their Actions and Communicate with Consumers (Unstable Internet, Little Electricity) |
| Why could Foreign Aid be Useful for Infrastructure? | -A Purpose for Foreign Aid is to improve a Developing Nation's Infrastructure, whether that's right after an Emergency or if it's a Long Term Plan
-One reason for this can be due to Raw Materials being easy to Extrapolate. Like the DRC, Chile, Indonesia... |
| Why can Rapid Population Growth lead to a Lack of Economic Development | -If the Nation's Population grows Faster than the Economy, the GNI per Capita will fall - HDI will also fall leading to a Fall in Development. Some parts of Africa, like Ethiopia or Nigeria, are Experiencing this now
-More Children can put Large Pressure on already struggling developing Education Systems. |
| How does Household Poverty affect the Economy Development? | -This is a Major Factor in why Children are not in School, and if they don't go to school, they have very little Education
-Low Education translates to a Workforce that is Low on Productivity, which can make it hard to Incentivise FDI to allow Improvements and also for Professional Careers to be set up (Doctors, Lawyers, Financers) |
| Why can Disease affect the Nation's Economy and Development? Use HIV/AIDS as an Example | -Lower Productivity can occur from this, and Strains put on a nation's Healthcare System
-HIV/AIDS has been Rampant in Africa and is considered a Huge Humanitarian Crisis. This led to a lot of Children being Orphaned and thus miss out School and Education, affecting themselves, and the Economy |
| What is the 'Savings Gap' and why is it Crucial for Investment?
-What happens if Incomes are low? | -This is the Gap between the Level of Domestic Saving and the Investment required for the Economy to Growth
-If Incomes are Low, then Saving will also be Low as well, meaning quite Little Investment will be possible. Little Investments brings about Little Capital, which generates not a lot of Income. The cycle thus repeats... |
| What is Capital Flight?
-Link to Economic Development | -Refers to when People hold their Savings Abroad, due to Higher Tax Rates or Political Instability
-Lack of Domestic Investment can make Economic Growth hard to Achieve, and less Tax Revenue is Collected because of Capital Flight
-This less can be spent on Education and Healthcare, and Economic Growth will probably be Stinted |
| What is a Foreign Exchange Gap? | -When Capital Outflows from a Nation are GREATER than Capital Inflows
-This can happen when the Nation is Dependent on Exports of Primary Products, or Imports of Manufactured Goods. Or if it has to Spent a lot of money to Service its Debt |
| Why can Little Property Rights lead to Low Economic Development? | -(Liberals and Conservatism!) If Consumers aren't sure they can keep the Land they have, Investment will probably be low in their Homes, or even set up Firms
-This will Harm Economic Development because Economic Growth is low |
| What are Primary Products?
-Note Properties of them (Elasticities, Value added..) | -Also known as Commodities, they are Products taken Directly from the Earth
-This can include Minerals like Copper and Iron, or Plants like Rice, Wheat and Fruits
-This is where 'value added' is Low. They won't generate Huge Profits as a Firm won't be able to Increase the Products Worthiness
-Also they are usually price-inelastic. Change in Demand --> Huge Effect on Price. Some Agriculture Primary Products will be Supply Inelastic too, because its Hard to Quickly Grow some Crops, plus, Damage from Natural Events and Weather. |
| What does it mean for Primary Products to be Volatile? | -Producers' Incomes and Earnings from Exports could change Greatly
-If Supply and Demand are Inelastic (Cash Crops) then any change in Either will Greatly Affect the Price. This Uncertainty makes it hard to Plan and Invest |
| What is the Prebisch-Singer Hypothesis? | -Demand for Primary Products are Income Inelastic. So as Incomes rise, Demand changes quite Little
-Demand for Manufactured Products are more Income Elastic. So as Income rises, Demand changes a lot more
-As the Price of Manufactured Goods Increases, Nations exporting Primary Products will be Unable to Import Fewer Manufactured Goods for a Given Level of Exports
-Thus Relying on Cash Crops and Primary Products are not Long Term |
| What are the Problems with using the Prebisch Singer Hypothesis? | -As the Population Increases, there will be Greater Demand for Agricultural Products that can Push Prices up
-Demand for some Primary Products, like Gold or Oil, are Income Elastic. And also Essential for the Developed World
-If a Nation has a Comparative Advantage in making Primary Products, then it would be Inefficient to do something else |
| What is Corruption, and why can Corruption be so damaging for Economic Development? | -Corruption happens when Power is Abused for Personal Gain
-A nation's Resources often will be Diverted Away from the most Productive Use, making Governments and Firms less Efficient
-It can be much worse though, for example. If the Police expect to be paid the same Bride by people whether they've Broken the Law or not, then what's the point of Acting Honestly? The Law System and Government comes Crashing Down
-Even an Unstable Bureaucracy can make it hard for Development - A Broken Tax office would be Damaging for Collecting Tax |
| Why can Civil Wars be Damaging for Economic Development? | -Civil Wars are Disasters for the People living there, and the Economy
-People are killed, or become Refugees and flee elsewhere, Absolute Poverty becomes Rapid, Infrastructure falls apart and Diseases become widespread
-Even when the war ends, the Capital Flight and Military Spending becomes too high for such a Economic Miracle to occur, without Outside Help. |
