IB Economics Revision Checklist:
Development Economics
(syllabus section 4)
Can You…
HL Skill Yes - Just Not
only: well about at all
4.1 Economic development
Distinguish between economic growth and economic development.
Explain the multidimensional nature of economic development in terms of reducing
widespread poverty, raising living standards, reducing income inequalities and
increasing employment opportunities.
Explain that the most important sources of economic growth in economically less
developed countries include increases in quantities of physical capital and human
capital, the development and use of new technologies that are appropriate to the
conditions of the economically less developed countries, and institutional changes.
Discuss the relationship between economic growth and economic development,
noting that some limited economic development is possible in the absence of
economic growth, but that over the long term economic growth is usually necessary
for economic development (however, it should be understood that under certain
circumstances economic growth may not lead to economic development).
Explain, using examples, that economically less developed countries share certain
common characteristics (noting that it is dangerous to generalize as there are many
exceptions in each case), including low levels of GDP per capita, high levels of poverty,
relatively large agricultural sectors, large urban informal sectors and high birth rates.
[Common characteristics of economically less developed countries]
Explain that in some countries there may be communities caught in a poverty trap (=
poverty cycle) where poor communities are unable to invest in physical, human and
natural capital due to low or no savings; poverty is therefore transmitted from
generation to generation, and there is a need for intervention to break out of the
cycle.
Explain, using examples, that economically less developed countries differ enormously
from each other in terms of a variety of factors, including resource endowments,
climate, history (colonial or otherwise), political systems and degree of political
stability. [Diversity among economically less developed nations]
Outline the current status of international development goals, including the
Millennium Development Goals (2000-2015) and Sustainable Development Goals
(2015-2030). [International development goals]
4.2 Measuring development
Distinguish between GDP per capita figures and GNI per capita figures.
Compare and contrast the GDP per capita figures and the GNI per capita figures for
economically more developed countries and economically less developed countries.
Distinguish between GDP per capita figures and GDP per capita figures at purchasing
power parity (PPP) exchange rates.
Compare and contrast GDP per capita figures and GDP per capita figures at purchasing
power parity (PPP) exchange rates for economically more developed countries and
economically less developed countries.
Compare and contrast two health indicators for economically more developed
countries and economically less developed countries.
Compare and contrast two education indicators for economically more developed
countries and economically less developed countries.
Explain that composite indicators include more than one measure and so are
considered to be better indicators of economic development.
Explain the measures that make up the Human Development Index (HDI).
Compare and contrast the HDI figures for economically more developed countries and
economically less developed countries.
Explain why a country’s GDP/ GNI per capita global ranking may be lower, or higher,
HL Skill Yes - Just Not
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than its HDI global ranking.
4.3 The role of domestic factors
With reference to a specific developing economy, and using appropriate diagrams
where relevant, examine how the following [domestic] factors contribute to economic
development:
a. Education and health [human capital]
b. The use of appropriate technology
c. Access to credit and micro-credit
d. The empowerment of women
e. Income distribution
f. Infrastructure
4.4 The role of international trade
With reference to specific examples, explain how the following factors are barriers to
development for economically less developed countries [Trade problems facing many
economically less developed countries]:
a. Over-specialization on a narrow range of products
b. Price volatility of primary products
c. Inability to access international markets
√ With reference to specific examples, evaluate the following factor as a barrier to
development for economically less developed countries.
a. Long-term changes in the terms of trade
With reference to specific examples, evaluate each of the following as a means of
achieving economic growth and economic development. [Trade strategies for
economic growth and economic development]:
a. Import substitution
b. Export promotion
c. Trade liberalization
d. The role of the WTO
e. Bilateral and regional preferential trade agreements
f. Diversification
4.5 The role of foreign direct investment (FDI)
Describe the nature of foreign direct investment (FDI) and multinational
corporations (MNCs).
Explain the reasons why MNCs expand into economically less developed countries.
Explain the characteristics of economically less developed countries that attract FDI,
including low cost factor inputs, a regulatory framework that favours profit
repatriation and favourable tax rules.
Evaluate the impact of foreign direct investment (FDI) for economically less developed
countries. [Advantages and disadvantages of FDI for economically less developed
countries]
4.6 The roles of foreign aid and multilateral development assistance
Explain that aid is extended to economically less developed countries either by
governments of donor countries, in which case it is called official development
assistance (ODA), or by nongovernmental organizations (NGOs).
Explain that humanitarian aid consists of food aid, medical aid and emergency relief
aid.
Explain that development aid consists of grants, concessional long-term loans, project
aid that includes support for schools and hospitals, and programme aid that includes
support for sectors such as the education sector and the financial sector.
Explain that, for the most part, the priority of NGOs is to provide aid on a small scale
to achieve development objectives.
Explain that aid might also come in the form of tied aid.
Examine the motivations of economically more developed countries giving aid.
Compare and contrast the extent, nature and sources of ODA to two economically less
developed countries.
Evaluate the effectiveness of foreign aid in contributing to economic development.
HL Skill Yes - Just Not
only: well about at all
Compare and contrast the roles of aid and trade in economic development.
Examine the current roles of the IMF and the World Bank in promoting economic
development. [Multilateral development assistance]
4.7 The role of international debt
Outline the meaning of foreign debt and explain why countries borrow from foreign
creditors.
Explain that in some cases countries have become heavily indebted, requiring
rescheduling of the debt payments and/or conditional assistance from international
organizations, including the IMF and the World Bank. [consequences of foreign debt]
Explain why the servicing of international debt causes balance of payments problems
and has an opportunity cost in terms of foregone spending on development
objectives. [consequences of foreign debt]
Explain that the burden of debt has led to pressure to cancel the debt of heavily
indebted countries. [HIPC]
4.8 The balance between markets and intervention
Discuss the positive outcomes [strengths] of market-oriented policies (such as
liberalized trade and capital flows, privatization and deregulation), including a more
efficient allocation of resources and economic growth.
Discuss the negative outcomes [weaknesses] of market-oriented strategies, including
market failure, the development of a dual economy and income inequalities.
Discuss the strengths of interventionist policies, including the provision of
infrastructure, investment in human capital, the provision of a stable macroeconomic
economy and the provision of a social safety net.
Discuss the limitations of interventionist policies, including excessive bureaucracy,
poor planning and corruption.
Explain the importance of good governance in the development process.
Discuss the view that economic development may best be achieved through a
complementary approach, involving a balance of market oriented policies and
government intervention.