5.2 development economics growth
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Economic DevelopmentTopic 5.2
Sources and Consequences of Economic Growth and
Development
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+Key concepts for Topic 5.2
Explain and give sources of economic growth
Distinguish and give examples of physical and social capital
Distinguish and give examples of the concepts of capital widening and deepening
Explain consequences of economic development
Give examples of infrastructure
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Sources of Economic Growth and Development
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+Comparing Singapore and Zambia
Singapore is a modern developed country with high standards of living.
Zambia is a land locked county with low levels of development and few opportunities for Economic Growth.
Both countries were colonized at similar times
So where do the differences come from?
GDP growth 7.5% (2007)GDP per capita $48,900 (2007)GDP by sector agriculture: 0%, industry: 33.7%,
services: 66.3% (2007)
GDP growth 6.0% (2007)GDP per capita $1400 (2007)GDP by sector agriculture: 22%,
industry: 29%, services: 48.9%
(2007)
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+Singapore hasn’t always been economically developed….
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+Sources of Economic GrowthSingapore
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+Natural resources
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+Human Capital Factors Quantity of human capital
Population growth – grants and financial support Immigration levels – working visas Getting older people and more women into work
Quality of human capital Immigration schemes to target skilled professionals,
relocation costs, tax credits Investment in education, longer hours – budget 21% of
government spending – USA 4% Promoting training at work schemes (apprenticeships) Improvements in Healthcare to extend working life
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+Physical Capital - Technological Quantity of investment
Changing variables such as domestic savings, level of private investment, government involvement, foreign investment
Government owned corporations create 60% of GDP Reduce barriers to investment, tax credits, foreign
ownership rules – 1965 onwards Stimulate aggregate demand and shift aggregate supply in
LR
Quality of investment? Skill training for workers, Higher education and research Access to foreign technology and expertise Capital widening vs Capital Deepening Productivity increases 3000 Multinational Corporations
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+Institutional Factors Adequate banking system
Legal system free from Corruption
Good education system
Developed modern infrastructure MRT Changi Airport Ports and refining industries
Political stability – one party democracy
International Relations – member of ASEAN and APEC, US Free Trade agreement
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+So what sets Singapore apart?
Singapore was faced with a lack of physical resources and a small domestic market. In response, the Singapore Government
adopted a pro-business, pro-foreign investment, export-oriented economic policy combined with state-directed investments in strategic government-owned
corporations