Summary of IGCSE Economics 0455 Chapter 5 | Economic Development | 2023 - 2025 syllabus

Summary of IGCSE Economics 0455 Chapter 5: Economic Development

Main Ideas and Concepts:

• Economic Development: Focuses on the overall well-being of the population, examining Living Standards, poverty, and the differences between developed and less developed economies.
• Living Standards: Defined as the factors contributing to a person's well-being and happiness. It is primarily measured through GDP per capita, which reflects the average income per person in an economy.
• Measurement of Living Standards:
  • Advantages of GDP per capita:
    • Indicates total production in an economy.
    • Correlates with employment rates and economic growth.
    • Readily available and commonly used for predictions.
  • Disadvantages of GDP per capita:
    • Fails to account for purchasing power and income inequality.
    • Does not consider technological advancements or unpaid work.
    • Excludes factors like health, education, and environmental quality.
• Human Development Index (HDI): Developed by the United Nations to measure Living Standards, incorporating:
  • Income Index: Average national income.
  • Education Index: Years of schooling.
  • Healthcare Index: Life expectancy at birth.
  • Advantages of HDI:
    • Accounts for major indicators of Living Standards.
    • Recognizes social factors beyond mere output.
    • Useful for global comparisons.
  • Limitations of HDI:
    • Combines separate indicators, which may not correlate.
    • Does not address income inequality.
    • Lacks data availability for all countries.
• Causes of Differences in Living Standards:
  • Within a country: Regional income variances, Government Policies, and local services.
  • Between countries: Industrial productivity, resource availability, tax structures, corruption, and impacts of war and natural disasters.
• Poverty:
  • Types:
    • Absolute Poverty: Inability to afford basic necessities.
    • Relative Poverty: Having fewer resources than others in the same society.
  • Causes of Poverty: Unemployment, low education levels, family size, age, government support, health issues, and overpopulation.
  • Government Policies to Address Poverty:
    • Measures to reduce unemployment.
    • Progressive taxation.
    • Welfare services.
    • Improved education quality and access.
• Population Factors:
  • Birth Rates: Influenced by Living Standards, contraception use, customs, and female employment.
  • Death Rates: Affected by Living Standards, healthcare advancements, and external factors like wars and natural disasters.
  • Migration: Driven by the pursuit of better Living Standards, employment opportunities, and climate conditions.
• Population Structure: Examines age and gender distribution, which impacts labor force participation and social services.
• Economic Development: Encompasses improvements in Living Standards, poverty reduction, and balanced population growth, with indicators like life expectancy and literacy rates highlighting a country's development status.

Methodology and Key Takeaways:

• Understand the definitions and implications of Living Standards, GDP, and HDI.
• Analyze the advantages and disadvantages of different measures of Living Standards.
• Recognize the multifaceted causes of poverty and the effectiveness of government interventions.
• Explore the relationship between population dynamics and Economic Development.

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