Economic Development Topic 5.2 Sources and Consequences of Economic Growth and Development

Key concepts for Topic 5.2 Explain and give sources of economic growth Distinguish and give examples of physical and social capital Distinguish and give examples of the concepts of capital widening and deepening Explain consequences of economic development Give examples of infrastructure

Explain and give sources of economic growth

Distinguish and give examples of physical and social capital

Distinguish and give examples of the concepts of capital widening and deepening

Explain consequences of economic development

Give examples of infrastructure

Sources of Economic Growth and Development

Comparing Singapore and Zambia Singapore is a modern developed country with high standards of living. Zambia is a land locked county with low levels of development and few opportunities for Economic Growth. Both countries were colonized at similar times So where do the differences come from? GDP growth 7.5% (2007) GDP per capita $48,900 (2007) GDP by sector agriculture: 0%, industry: 33.7%, services: 66.3% (2007) GDP growth 6.0% (2007) GDP per capita $1400 (2007) GDP by sector agriculture: 22%, industry: 29%, services: 48.9% (2007)

Singapore is a modern developed country with high standards of living.

Zambia is a land locked county with low levels of development and few opportunities for Economic Growth.

Both countries were colonized at similar times

So where do the differences come from?

Singapore hasn’t always been economically developed….

Sources of Economic Growth Singapore

Natural resources

Human Capital Factors Quantity of human capital Population growth – grants and financial support Immigration levels – working visas Getting older people and more women into work Quality of human capital Immigration schemes to target skilled professionals, relocation costs, tax credits Investment in education, longer hours – budget 21% of government spending – USA 4% Promoting training at work schemes (apprenticeships) Improvements in Healthcare to extend working life

Quantity of human capital

Population growth – grants and financial support

Immigration levels – working visas

Getting older people and more women into work

Quality of human capital

Immigration schemes to target skilled professionals, relocation costs, tax credits

Investment in education, longer hours – budget 21% of government spending – USA 4%

Promoting training at work schemes (apprenticeships)

Improvements in Healthcare to extend working life

Physical Capital - Technological Quantity of investment Changing variables such as domestic savings, level of private investment, government involvement, foreign investment Government owned corporations create 60% of GDP Reduce barriers to investment, tax credits, foreign ownership rules – 1965 onwards Stimulate aggregate demand and shift aggregate supply in LR Quality of investment? Skill training for workers, Higher education and research Access to foreign technology and expertise Capital widening vs Capital Deepening Productivity increases 3000 Multinational Corporations

Quantity of investment

Changing variables such as domestic savings, level of private investment, government involvement, foreign investment

Government owned corporations create 60% of GDP

Reduce barriers to investment, tax credits, foreign ownership rules – 1965 onwards

Stimulate aggregate demand and shift aggregate supply in LR

Quality of investment?

Skill training for workers, Higher education and research

Access to foreign technology and expertise

Capital widening vs Capital Deepening Productivity increases

3000 Multinational Corporations

Institutional Factors Adequate banking system Legal system free from Corruption Good education system Developed modern infrastructure MRT Changi Airport Ports and refining industries Political stability – one party democracy International Relations – member of ASEAN and APEC, US Free Trade agreement

Adequate banking system

Legal system free from Corruption

Good education system

Developed modern infrastructure

MRT

Changi Airport

Ports and refining industries

Political stability – one party democracy

International Relations – member of ASEAN and APEC, US Free Trade agreement

So what sets Singapore apart? Singapore was faced with a lack of physical resources and a small domestic market. In response, the Singapore Government adopted a pro-business, pro-foreign investment, export-oriented economic policy combined with state-directed investments in strategic government-owned corporations

Singapore was faced with a lack of physical resources and a small domestic market. In response, the Singapore Government

adopted a pro-business, pro-foreign investment,

export-oriented economic policy combined with

state-directed investments in strategic government-owned corporations