5.1 Sources of economic growthand/or development1. Natural factors: the quantity and/or quality of land or raw materials2. Human factors: the quantity and/or quality of human resources3. Physical capital and technological factors: the quantity and quality of physical capital – not covered today.
What are the possible advantages anddisadvantages of LDCs finding deposits of diamonds?
What are the advantages anddisadvantages of relying on tourism?
Natural factors: the quantity and/or quality of land or raw materials Land and raw materials can be used for productive purposes, creating employment, income and export revenue. BUT: Low YED for farming output Low value added Low skilled jobs / limited transferable skills Abundant resources can be a curse.
Ample natural resources – a blessing or a curse? Ranis (1981): Large countries with ample natural resources (especially those of S America) exploit this apparent advantage – producing more beef, coffee or sugar instead of investing in the development of a manufacturing sector. Entrenched interests perpetuated the prevailing patterns of production. S Asian countries could not simply expand the production of primary products to increase export earnings because they do not have the land. They had to take the industrialisation route to earn foreign currency.
An inverse relationship between resource exports as % of GDP and growth?
The resource curse Exporting large quantities of primary products: make the country vulnerable to changes in prices Low YED / low incomes Deteriorating terms of trade Force up the exchange rate and negatively impact on the competitiveness of other (manufacturing) sectors to emerge (the Dutch disease) Political corruption and instability is often associated with the natural resource curse but which causes the other?
Human factors: the quantity and/or quality of human resources The accumulation of human capital is one of the fundamental keys to the development process. In pairs write down why education could be so important to economic development. Consider the meaning of development as well as straightforward economic factors. For each reason come up with one analysis point and one evaluation point. Consider why women’s education might be particularly important to development.
Education and growth A 1990 World Bank study of the high performance Asian economies found that enrolment in primary education in 1960 predicted the following percentages of growth during the period 1960 – 1985: % of total predicted growth Hong Kong 86 Indonesia 79 Japan 58 South Korea 67 Malaysia 73 Taiwan 69 Singapore 75 Thailand 87 This table suggests that the level of primary education was far and away the most important contributor to the predicted growth rates of the HPAEs and Japan.
Womens’ education Pass on education to children Opportunity cost of having children More able to care for sick children – can read instructions In Africa studies have shown that a 10% increase in female literacy rates reduces child death rates by 10%, men’s rates had no impact. Thailand – women with primary education were 30% more likely to be able to treat diarrhoea in children. Studies in Indonesia, Kenya, Morocco and Peru show relationship between years of women’s education and reduced child mortality rates. In Guatemala it takes 15 times more spending to achieve a given improvement in child nutrition when income is earned by the father than when it is earned by the mother. World Bank 1993
The Population Problem % change in GDP = % change in - % change in per capita GDP population The demographic transition model CBR determined by family income and education level of women. As these rise birth rates fall. Access to & knowledge about contraception / abortion and social moral legal views impact upon fertility. The role of children in LDCs, worker, sibling carer, insurance What is the economic ‘role’ of children in MEDCs? Infant mortality rates