Indicators of living standards
● HDI: human development index
○ Considers life expectancy
○ Considers education
○ Doesn't take into account:
■ Freedom
■ Environment
■ Does not consider differences in life expectancy, income and education
● GPI: genuine progress indicator
○ Accounts for inequality
○ Accounts for environmental stuff
○
● Real GDP per head
○ Not everyone may benefit from a rise in GDP since it's an average
○ An increase in output doesn't directly translate to increased living standards if
■ Good being produced is a demerit
○ Some economic activity is undeclared
○ When making comparisons
■ Takes into account population sizes and adjusts for inflation
■ Doesn't account for
● Income disparity
● Informal economy
● Working hours and conditions
● Quality of output
● Environmental conditions
■ Different currencies
● Other indexes
○ GII gender inequality index
○ HLEI: happy life expectancy index
○ Gross national happiness
Poverty
Absolute poverty: when people can't pay for necessities
Relative poverty: when people are poorer than others in a country
“
● Unemployment
● Low wages
● Falling ill
● Growing old
● Circle of poverty
MPI: measure of poverty based on education, health and standard of living
Policies to reduce poverty
● Quantity and quality of education
● Promoting economic growth
● Minimum wage
● More multinational companies
● State benefits
● Land reform
● Measures to raise living standards
○ Improving education
○ Reduce unemployment
○ Improve healthcare
○ Improve working conditions
○ Reduce pollution
○ Government provision
○ Reducing legislation
○ Reducing taxation
○ Provision of cash benefits
○ Free education and stuff
Population
Factors affecting population growth
● Emigration: leaving the country
● Immigration: entering the country
● Birth rate
● Death rate
Population growth differences
● Infant mortality rate
● Net migration
● Cost of having children
● Health
Population pyramids show the structure of the population
𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑑𝑒𝑝𝑒𝑛𝑑𝑎𝑛𝑡 𝑎𝑔𝑒 𝑔𝑟𝑜𝑢𝑝𝑠
𝑑𝑒𝑝𝑒𝑛𝑑𝑒𝑛𝑐𝑦 𝑟𝑎𝑡𝑖𝑜: 𝑛𝑢𝑚𝑏𝑒𝑟 𝑖𝑛 𝑡ℎ𝑒 𝑙𝑎𝑏𝑜𝑟 𝑓𝑜𝑟𝑐𝑒
× 100%
optimum population: balance between population and
resources
● Effects of population growth
● Make better use of resources near optimum population
● Size of markets increase
● Increase in factor mobility
● More demand
● Rise in labor force
● Famine concerns
● Restriction in living standards, not enough resources beyond optimal population
● Overcrowding
● Environmental pressure
● Pressure on employment opportunities
● Balance of payments pressure
Ways of reducing birth rate
● Improve education and employment for woman
● Improvement in healthcare and food: reduce infant mortality and thus birth rate
● Raise cost of having children
● Reduce financial support
Consequences of aging population
● Dependency ratio rise
● Change in labor force
● Healthcare demand
● More welfare resources used
● Rise in pension cost
● Change in pattern of demand
Differences in economic development between countries
Economic development: improvement in welfare
Measures: HDI, GDP per head
Causes of differences in economic development
● Differences in income
● Saving differences
● Difference in investment
● Population growth
● Education and healthcare
● Size of primary, secondary and tertiary sectors
● Exports
● Productivity
Problem in low economic development economies
● High population growth
● International debt
● Reliance on export
● Lack of investment
● Emigration of key workers
● Trade restrictions
● Unbalanced markets in different sectors
Measures to promote economic development
● Protection of local industries against foreign imports
● Promote exports
● Improve infrastructure, capital stock, education, training and healthcare
● Attracts MNCs
Foreign aid
● Better terms than commercial
● Creates dependency
● May result in corruption
● World bank
● International monetary fund
Development in one country can lead to development in another country cause of
● Increased foreign aid
● More demand for exports
● tourists