BW037 and 038

HL2 BW037

Name and explain the four international barriers to development

1- over-specialization on a narrow range of products

 Some countries are very dependent on a certain type of good usually a primary good

 They become dependent on it and the rise and fall of its price

 Thus they face vulnerabilities to it

 2- price volatility of primary products

 Prices of commodities on the world market tend to be ineleastic

 Makes it hard for producers in the developing world to make plan ahead

 3- inability to access international markets

 Protectionism in other countries harm the developing countries ability to export thus they cant make a living and get education etc.

 4- long term changes in the terms of change

 Changes in the relative price of exports and imports can have a negative effect on their importing

Identify and briefly explain the five trade strategies that affect growth and development

- import substitution

 Stragetegy in which developing countries should attempt to produce as much as they can locally so the country will economically grow and they will be able to become competitive

 Conditions-

 1. government needs to adopt a policy of organizing the selection of goods to produce locally

 2, subsidies are ready available

 3. gov needs to implement aprotectionist system with trade barriers to keep out forign import

 Advantages- protects domestic jobs

 - protects the local culture and social habits

 Protects the economy from bad influences  of multi coporations

 Disadvantages-

 In the long run economic growth mught be lower

 Cannot experience the benefits of comparite advantage

 Leads to inefficiency

 Leads to high rate of inflation

 May cause other countries to take retalitatory protectionist methods

 2- export promotion

 Increasing exports lead to increased GDP

 Will need to adopt certain policies

 1. liberalized trade

 2. liberalized capital flow

 3. a floating exchange rate

 4. investmant in the rovisions pf infratstucture

 5. deregulation and minimal gov intervention.   

 Cons- protectionism in other countries becasue of cheep prices from the asian tigers

 - government have to intervene to build highways, infrastrucvtuere

 - MNCs may have to much power

 - income inequality

 3- trade liberalization

 Reforms-

 Fiscal dicipline

 Spending on health and educatipn

 Lower tax

 Liberalize interst rates

 A competive exchange rate

 Trade liberalizaation

 Livberalization of FDI inflows

 Privatization

 Deregulation

 Securer propety rights

 May lead to bad workign environments and inequality

 4- bilateral and regional preferential trade agreements

 More agreements made more trade can occur

 5- diversification

 Diversifying their exports, exporting more than one thing

Explain the single that encourages development but does not necessarily benefit growth                  

 Fairtrade organization

A movement which strives for fair treatment for farmers. In a fair trade agreement, farmers, who in other situations might be more susceptible to the will of the purchaser, will negotiate with the purchasers in order to receive a fair price for their products. Farmers who engage in fair trade also aim to pay their workers a fair price, and engage in environmentally-friendly practices.

international trade and economic development

international trade and economic development

International barrier to trade	1- over-specialization on a narrow range of products Some countries are very dependent on a certain type of good usually a primary good They become dependent on it and the rise and fall of its price Thus they face vulnerabilities to it 2- price volatility of primary products Prices of commodities on the world market tend to be ineleastic Makes it hard for producers in the developing world to make plan ahead 3- inability to access international markets Protectionism in other countries harm the developing countries ability to export thus they cant make a living and get education etc. Tariff escalation Common situation where the import duties on components or raw materials are lowest, and move progressively higher on semi-finished goods upwards to the finished goods 4- long term changes in the terms of change Changes in the relative price of exports and imports can have a negative effect on their importing
Trade strategies for economic growth and economic development	1- import substitution Stragetegy in which developing countries should attempt to produce as much as they can locally so the country will economically grow and they will be able to become competitive Conditions- 1. government needs to adopt a policy of organizing the selection of goods to produce locally 2, subsidies are ready available 3. gov needs to implement aprotectionist system with trade barriers to keep out forign import Advantages- protects domestic jobs - protects the local culture and social habits Protects the economy from bad influences  of multi coporations Disadvantages- In the long run economic growth mught be lower Cannot experience the benefits of comparite advantage Leads to nnefeciancy Leads to high rate of inflation May cause other countries to take retalitatory protectionist methods 2- export promotion Increasing exports lead to increased GDP Will need to adopt certain policies 1. liberalized trade 2. liberalized capital flow 3. a floating exchange rate 4. investmant in the rovisions pf infratstucture 5. deregulation and minimal gov intervention.    Cons- protectionism in other countries becasue of cheep prices from the asian tigers - government have to intervene to build highways, infrastrucvtuere - MNCs may have to much power - income inequality 3- trade liberalization Reforms- Fiscal dicipline Spending on health and educatipn Lower tax Liberalize interst rates A competive exchange rate Trade liberalizaation Livberalization of FDI inflows Privatization Deregulatio Securer propety rights May lead to bad workign environments and inequality 4- bilateral and regional preferential trade agreements Mroe agreements made more trade can occur 5- diversification Diversigying their exports, exporting more than one thing
Development stratagies	Fairtrade organization A movement which strives for fair treatment for farmers. In a fair trade agreement, farmers, who in other situations might be more susceptible to the will of the purchaser, will negotiate with the purchasers in order to receive a fair price for their products. Farmers who engage in fair trade also aim to pay their workers a fair price, and engage in environmentally-friendly practices.

BW 35

BW 35

Name and explain composite indicators of development

1-      Human development index- number between 0-1 of the standard of living in a country based on health, education and gdp

Health- Health measures-Life expectancy- Average number of years a person is expected to live in a country

Infant mortality rates- number of deaths of babies under the age of one

Education- adult literacy rate

 Measure of the proportion of adults over 15 who are literate

Net enrollment in primary education- measure of the ratio of children enrolled in primary school of the primary school age

Financial measures- GDP per capita and GNI are often used to assess growth and development

Purchasing power parity

2. GDI- gender related development index- adjusted for inequalities between men and women

3. GEM-Gender empowerment measure- looks at numbers figures about women in leadership managerial, and parliamentary positions

 Between 0-1

4. Human poverty index HPI- Level of deprivation and poverty experienced in a country

5. Genuine progress indicator- Attempts to measure a country's growth has actually led to an increase in welfare of its people

Gdp +includes work such as volunteerism that wasn’t included in the GDP

Excludes costs of external costs of production.

Domestic factors and economic develpment

Domestic factors and economic develpment

Introduction	Domestic factors that may act as sources of economic development and if absent are barriers to development Institutions are "the structures that humans impose on human interaction and therefore define the incentives that determine the choices that individuals make that shape the performance of societies and economies over time"
Education	Improve well being of population Both the educated and the society leads to - more effecient workers -better able to read and comunicate-> the ability to debate Benifits- 1. improve the role of women in society -> better live birth rates 2. improve levels of health ->improved education levels ->literacy rates -> improved levels of health Millennium goal is to ensure children everywhere will be able to complete an elementary school education Efforts have been made but things are also insufficient some places because -child labour -insufficient funding
Health care	Will improve general level of economic development Storngest correlation between life expacenacy and healthcare Countries with more of their gdp going to health care have higher life expectancies Correlation between life expectancy and education
infrastucture	The essential facilities and services such as roads , railways, telphone, and other utilites which are necessary for economic activity Lead to- -> children can get easier to school ->telephone makes it easier to communicate etc. ->gas and electricity makes it possible to cook and treat food Types of infrastructure Transport- Roads Railways Seaports Airports Public utilities-electricity Gas Water supply Public services-police service Fire service Education Communication services- postal syestm Radio and television
Political stability and lack of corruption	Countries that are politcaly stable are more likely to recieve FDI and aid Polit stability leads to- -> input in running the country Polit instability leads to -> uncertainty and economic break down ->low level of living low incomes ->lower economic growth Corruption- Defined as dishonest explotation of power for personal gain Prevalent where- 1. govs are not accountable for their people 2. govs spend large amount of money on large scale capital investmand projects 3. official accounting practices are not well formulated or controlled 4. gov officials are not well payed 5. political elections are not well controlled 6. legal structures are weak 7. freedom of speech is lacking Types of corruption 1. eloectoral corruption- wishes of the people are not heeded 2. legal issues- people can buy their way out of trouble 3. unfair allocation of resources- contracts go to the highest bidder and then there is market failure 4.bribes. Bribes increase the costs of business 5. trust- hard to get forign investment 6.contracts are not honored- 7. diveting money away from education to others 8. regulations- officials turn a blind eye on regulations 9. capital flight 10. reduces the wellbeing of the common citizen  because of bribes
Legal systems	Property rights- Right to own assets Right to use assets Right to benfit from assets Right to sell assets Right to exclude others If people cant do these there is no incentive to make investmants and growth
Financial systems and credit	Saving leads to unvestmant- can be hard without proper institutuions People tend to buy assets when they dont have it like cows Micro loans- Microcredit is the extension of very small loans (microloans) to impoverished borrowers who typically lack collateral, steady employment and a verifiable credit history. It is designed not only to support entrepreneurship and alleviate poverty, but also in many cases to empower women and uplift entire communities by extension. In many communities worldwide, in developed and developing nations alike, women lack the highly stable employment histories that traditional lenders tend to require.
Taxation	Tax revenue provide govs with means to finance things Difficult to get taxes when the inefficency and corruptions Some times 3% Low corp tax Size of informal market Dont pay ta
Use of appropriate tech	Surplus of labour so they use hiigh input high labour things like nut sheller For consumption they use the solar cooker so it frees up time and saves the enviroment by not useing trees
The empowerment of wmen	Causes- -> well being of family is improved -> education improves -> quality of workeforce improves -> women earn more ->more control over their sexuial health thus less kids
Income distribution	High in developing countries Causes- Low level of savings Low investmant and low growth Rich tend to dominate politics and economy Pro poor growth for benifit of the man]

Domestic factors and economic develpment

post

HL-2 BW 034

HL-2 BW 034

1.       Differentiate between absolute and relative poverty

Relative poverty-comparitive level of poverty

 Completely relative-50% 60% of average income

 Absolute poverty-

 Don’t have the necessities for survival

 1.25$ a day-set by the World Bank

2.        Define and illustrate a poverty trap

Poverty trap- Any linked combination of barrier to growth and development

Growth leads to low income leads to low level of savngs leads to low levels of investment

Development leads to low income which leads to low productiviety which leads to low level of human capital

3.       List and define each of the single indicators: Financial, Health, Education

Financial- such as GDP per capita or GNI are indicators used to assess growth or development

Health- life expectancy at birth

-          Infant mortality rate

Education measures- Adult lit rate

Net enrolment ratio in primary

-          In general which will be higher for a developing country?

GDP/capita or GNI/ capita

GDP/ Capita or GDP/ Capita (PPP)

GNI for developed countries

GDP/Capita for developng countries

Measuring development

Measuring development

Poverty trap/poverty cycles	Relative poverty comparitive level of poverty Comletely relative-50% 60% Absolute poverty- The necessities for survival 1.25$ a day-set by the world bank- extreme poverty 2$-moderatly poverty Cyclical trap of poverty A poverty trap
Single indicators	Solitary measures that may be used to assess development Finanacial measures- GDP per capita and GNI are often used to assess growth and development FDI has increased dramatically in the last 10 years Workers remitnesses- money sent back by workers abroad- signigficant for developing countries Purchasing power parity Things cost less in different coutnries for example bread in vienna and in nigeria Big mac index- comparing prices of big macs around the world HEalth measures-Life expectncy Average number of years a person is expected to live in a coutnry Factors- good level of healthcare, health secrvicesm, provision of clean water etc. Infant mortality rates- number of deaths of babys under the age of one- greatly effected by healthcare Education Measures-adult literacy rate Measure of the proportion of adults over 15 who are literate- can read and write a short statemennt about their life Heavily influenced by amount of wealth in a country Net enrollment in primary education- measure of the ratio of children enrolled in primary school oft the primary shcool age
Composite indicators	Human developemtn index- number between 0-1 of the standard of living in a ciountry based on health, education and gdp How can HDI information be used Used in stead of GDP as it shows development more than GDP which only shows wealth
Other indicators of development	Is the HDI suffecient as the only guide to a country's development Can mask inequalities The gender related develpment index- Tries to break it down into different groups such as inequalities between men and women GDI- addjusted for enqualities between men and women
The Gender empowerment measure	GEM- looks at numbers figures abouyt women in leadership managerial, and parlimentary positions Between 0-1
Human poverty index HPI	Level of deprivation and poeverty experienced in a country Shows things such as equality
The genuine progress indicator	Genuibne progress indicator Attepts to measure a country's growth has actually led to an increase in welfare of its people Includes- environmental costs Social costs Commuting costs Cost of automoble accidents