Real-world issue 2
Real-world issue 2 - Why is economic development uneven?
Conceptual understandings
Perceptions of the meanings of development and equity change over time and vary across cultures.
Governments and other economic agents may intervene in an attempt to promote economic well-being and equity in societies.
The pursuit of sustainability is subject to various constraints.
Effective strategies should take account of the relevant social, economic, and political context.
Key concepts: scarcity, choice, efficiency, equity, economic well-being, sustainability, change, interdependence, intervention.
4.7 Sustainable development
The meaning of sustainable development
Sustainable Development Goals
Relationship between sustainability and poverty (HL only)
4.8 Measuring development
The multidimensional nature of economic development
Single indicators
GDP/GNI per person (per capita) at PPP
Health and education indicators
Economic/social inequality indicators
Energy indicators
Environmental indicators
Composite indicators
Human Development Index (HDI)
Gender Inequality Index (GII)
Inequality adjusted Human Development Index (IHDI)
Happy Planet Index
Strengths and limitations of approaches to measuring economic development
Possible relationship between economic growth and economic development
4.9 Barriers to economic growth and/or economic development
Poverty traps/poverty cycles
Diagram: a poverty cycle showing any linked combination of factors that perpetuate poverty
Economic barriers
Rising economic inequality
Lack of access to infrastructure and appropriate technology
Low levels of human capital—lack of access to healthcare and education
Dependence on primary sector production
Lack of access to international markets
Informal economy
Capital flight
Indebtedness
Geography including landlocked countries
Tropical climates and endemic diseases
Political and social barriers
Weak institutional framework
Legal system
Ineffective taxation structures
Banking system
Property rights
Gender inequality
Lack of good governance/corruption
Unequal political power and status
Significance of different barriers to economic growth and/or economic development
4.10 Economic growth and/or economic development strategies
Strategies to promote economic growth and/or economic development
Trade strategies
Import substitution
Export promotion
Economic integration
Diversification
Social enterprise
Market-based policies
Trade liberalization
Privatization
Deregulation
Interventionist policies
Redistribution policies including tax policies, transfer payments and minimum wages
Provision of merit goods
Education programs
Health programs
Infrastructure including energy, transport, telecommunications, clean water and sanitation
Inward foreign direct investment
Foreign aid
Humanitarian aid/development aid
Debt relief
Official Development Assistance (ODA)
Non-governmental organizations (NGOs)
Multilateral development assistance
The World Bank
International Monetary Fund
Institutional change
Improved access to banking, including microfinance and mobile banking
Increasing women’s empowerment
Reducing corruption
Property rights
Land rights
Diagrams: in this section students are expected to draw from the diagrams used in the other sections
Strengths and limitations of strategies for promoting economic growth and economic development
Strengths and limitations of government intervention versus market-oriented approaches to achieving economic growth and economic development
Progress toward meeting selected Sustainable Development Goals in the context of two or more countries
Inquiry—possible areas to explore (not an exhaustive list)
The patterns of economic development for countries in a region, using selected data.
The relationship between economic growth and development, for chosen countries.
The impact of a poverty reduction strategy, for a chosen country.
The impacts of FDI in a chosen country on economic growth and development.
The impacts of a microfinance project/debt relief/health programme/education programme in a chosen country/region.
Theory of knowledge questions
Economic development draws from a set of values set out by Denis Goulet in 1971 (life sustenance, self-esteem and freedom). Does this make the pursuit of economic development unscientific?
What knowledge questions might be encountered in constructing a composite indicator to measure development?
Are the values on which development is based universal or do they depend on culture? Are there some goals among the Sustainable Development Goals that may not be acceptable to some cultures?
Do economically more developed nations have a moral obligation to assist economically less developed nations, such as through foreign aid or World Bank lending? What criteria should economists use to make such judgments?
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