Economic Development – Pointers for Review
1️. Scarcity and Opportunity Cost – Resources are limited, so choices must be made (e.g.,
choosing between building schools or roads).
2️. Microeconomics vs. Macroeconomics – Micro focuses on individual firms and consumers,
while macro looks at the economy as a whole.
3️. Circular Flow of Income – Explains how households provide labor to firms in exchange for
wages, and firms provide goods and services to households.
4️. Production Possibilities Curve (PPC) – Shows trade-offs and opportunity costs in
production decisions.
5️. Factors of Production – Land, labor, capital, and entrepreneurship are the four key resources
in an economy.
6️. Economic Growth – Increase in GDP, but does not guarantee an improved quality of life.
7️. Economic Development – Focuses on health, education, and living standards (measured
by HDI).
8️. Indicators of Economic Development – HDI, GDP per capita, life expectancy, literacy rate.
9️. Role of Education in Development – Higher literacy rates improve employment and income.
10. Sustainable Development – Economic growth that preserves resources for future
generations.
1️1. Harrod-Domar Growth Model – Emphasizes savings and investment as drivers of
growth.
1️2. Rostow’s Stages of Growth – Countries develop in five stages: Traditional Society →
Take-off → High Mass Consumption.
1️3. Lewis Two-Sector Model – Explains the transition from agriculture to industrial
economies.
1️4. Dependency Theory – Developing countries struggle due to reliance on developed nations.
1️5. Neoclassical Growth Theory (Solow Model) – Highlights capital, labor, and technology
as key growth factors.
1️6. Gross Domestic Product (GDP) – Measures total output within a country's borders.
1️7. Gross National Income (GNI) – GDP plus net income from abroad.
1️8. Inflation – A general increase in prices, reducing purchasing power.
1️9. Unemployment Rate – Measures the percentage of people who are jobless but actively
seeking work.
2️0. Gini Coefficient – Measures income inequality (0 = perfect equality, 1 = extreme
inequality).
2️1. Government Role in Economic Growth – Policies in education, infrastructure, and
healthcare improve economic conditions.
2️2. Foreign Direct Investment (FDI) – Involves multinational companies investing in
developing economies.
2️3Trade Liberalization – Reducing tariffs and allowing free trade promotes business growth.
2️4. Import Substitution vs. Export Promotion – Some countries focus on producing goods
locally, while others focus on exports.
2️5. Effects of Globalization – Increased economic integration, but also risks such as job losses
in local industries.
2️6. Causes of Poverty – Lack of access to education, healthcare, and capital limits
opportunities.
2️7. High Population Growth & Its Effects – More people require more resources, straining
public services.
2️8. Climate Change & Its Impact – Environmental degradation affects agriculture and leads
to resource scarcity.
2️9. Corruption & Its Impact on Development – Misuse of public funds leads to weaker
economic growth.
3️0. Role of Technology in Economic Growth – Digital transformation (e-commerce, mobile
banking) helps economies grow faster.
