CIE Economics A-Level: Topic
CIE Economics A-Level: Topic
c) Classification of countries
Notes
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Indicators of living standards and economic development
The components of HDI are education, life expectancy and standard of living,
measured by real GNI at purchasing power parity (PPP) per capita.
The education component combines the statistics of the mean number of years of
schooling and the expected years of schooling.
The standard of living component measures GNI adjusted to PPP per capita. GDP was
used instead of GNI, but to account for remittances and foreign aid, GNI is now used,
since it reflects average income per person.
The average world HDI rose from 0.48 in 1970 to 0.68 in 2010. This was mainly due
to the growth of East Asia, the Pacific and South Asia.
The advantages and limitations of using the HDI to compare levels of development
between countries and over time
HDI does not consider how free people are politically, their human rights, gender
equality or people’s cultural identity.
HDI does not take the environment into account. It could be argued that this should
be included to focus on human development more.
HDI does not consider the distribution of income. A country could have a high HDI
but be very unequal. This can mean many people might still be in poverty.
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HDI does allow for comparisons between countries to be made, based upon which
countries are generally more developed than other countries.
Education and health are important development factors to consider, and it can
provide information about the country’s infrastructure and opportunities. It also
shows how successful government policies have been.
Human Poverty Index (HPI): measures life expectancy, education and the ability of
citizens to meet basic needs. There are two types: HPI-1 and HPI-2. The former
measures poverty in developing countries and the latter measures poverty in
developed countries.
In HPI-1, the longevity part of the index measures the probability of living to the age
of 40. The education component considers the adult literacy rate. The ability of
citizens to meet basic needs is measured by the percentage of underweight children
and the percentage of people not using improved water sources.
For HPI-2, the probability of not surviving to at least the age of 60 is used. The
percentage of adults which do not have literacy skills is calculated, and poverty is
calculated by those living below the poverty line. This is below 50% of median
income.
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Kuznets curve
Thomas Piketty famously discredited this theory in 2014 by arguing that the
capitalist free market system inevitably leads to continued inequality. The rate of
return on capital increases, so as the rich get richer with higher returns on their
investments, inequality increases.
LEDCs
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- Fast population growth
- Low levels of education
- Poor standard of living
- Poor nutrition, lack of access to clean, safe drinking water and a lack of sanitation
- Poor or absent health care provision
MEDCs
BRICS Economies:
o The BRICS are Brazil, Russia, India, China and South Africa. South Africa was included in
2010.
o They are characterised by their fast growth and their recent industrialisation. They have
significant influence in global affairs and all five nations are part of the G20.
o They rely heavily on industry: manufactured and engineered goods make up a lot of
their exports
o There is a lot of potential for innovation, particularly in renewable energy (Brazil:3 rd,
Russia:5th, India:6th and China 1st in the world)
o They are all seeing a considerable increase in demand for a higher standard of living.
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