Economic development Grade 11

ECONOMIC DEVELOPMENT

9.1  COMPARE ECONOMIC GROWTH AND ECONOMIC DEVELOPMENT

ECONOMIC GROWTH

ECONOMIC DEVELOPMENT

• Exists when there an increase in real GDP.
• Implies an increase in the capacity of the economy to produce more goods and services.
• The emphasis is on increasing GDP, perfect markets, maximum profit, etc.

• Exists when there is an increase in real per capita GNI (GDP)
• Implies an increase in the capacity of the population to produce more goods and services.
• The emphasis is on higher standards of living, more employment, less poverty, etc.

9.2 DEVELOPMENT METHODS

1. Attracting new businesses: more new businesses create employment opportunities that promote diversity and growth of the local economy.
2. Building community capacity: by developing their own skills, people will be in a position to make the most of available opportunities.
3. Expanding local markets: the local government should expand and promote local products and markets (export promotion and import substitution)
4. Using of outdated facilities: be transformed so that they can meet the new needs of the local community.
5. Promoting direct investment: government needs to upgrade infrastructure and build new facilities to create more jobs
6. Natural resources: must be used effectively to improve the standard of living of local people.

1. 3. COMMON CHARACTERISTICS OF DEVELOPING COUNTRIES

1. Low living

Standards

1. Low per capita income: about 80% of the world's population is living on less than 1/5 of the world's income.
2. Low growth of per capita income: developing countries have a slower growth of per capita real GNI than developed countries
3. Greater unequal distribution of income, income gap between rich and poor in the same country is generally greater in developing countries than developed countries.

4. More poverty: low living standards is an indication of poverty.

5. Low life expectancy: many people in developing countries are fight a battle against malnutrition, diseases etc.
6. Low levels of education: low living standards are related to low levels of education.

• Adult literacy rate refers to the % of people aged 15 years and above who can read, write and speak.
• Literacy rates in developing countries are lower than in developed countries.

2. Low levels of productivity

• Levels of labour productivity (output per worker) in developing countries are extremely low compared to developed countries.
• This is mainly due to the lack of management, lack of education and training and malnutrition during childhood.

3. High population growth and dependency

• Population growth: In developing countries, birth rates are very high and mortality low due to availability of medicines
• Dependence burden: children under the age of 15 represent almost 29% of the population. People over 64 years are also dependent on family.

4. High levels of unemployment

• Underemployment: people who are working less than they are able.
• Open unemployment (visible unemployment): people who are able to work, want to work but cannot find work

5. Dependence of the primary sector

• Agriculture: Most people in developing countries live and work in rural areas.
• Exports: Primary goods eg. agricultural products, minerals etc. are the main export goods.

6. Poor infrastructure

• Deficient infrastructure in developing and especially low-income countries.

9.4 DEVELOPMENT STRATEGIES

Natural Resources:

-Land:  Land ownership is a strong incentive to improve the quality of the soil.

-Minerals and fuels: The establishment of secondary industries which can process the raw primary products, and hence add value to labour.

--For a country to be  develop,  entrepreneurship  should be encouraged.

-A country can only perform at its best if managers / owners are willing to take risks.

Human resources:

-refers to the labour force.

-are the most important asset of a country.

-can be improved in various ways:

• Education and training: Improvement in literacy levels contribute to economic growth and development.
• Health: Healthy people are more energetic and productive and contribute to economic development.
• Population planning: Unplanned families are often the main cause of poverty and unemployment.
• Motivation: Human resources need to be motivated and must strive towards self-improvement.

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