Download 5.1 Sources of economic growth and/or development

5.1 Sources of
economic growth
and/or development
Natural factors: the quantity and/or quality of land or raw
materials
2. Human factors: the quantity and/or quality of human
resources
3. Physical capital and technological factors: the quantity
and quality of physical capital – not covered today.
1.
What are the possible advantages and
disadvantages of LDCs finding deposits of
diamonds?
What are the advantages and
disadvantages 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
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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:
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% 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
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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
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The demographic transition model
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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.
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The role of children in LDCs, worker, sibling carer, insurance
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What is the economic ‘role’ of children in MEDCs?
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Infant mortality rates