Notes for 4.8.1 The multidimensional nature of economic development - IB | RevisionDojo
4.8.1 The multidimensional nature of economic development Notes
Definition
Economic development
The process of increasing real per capita income while improving living standards and reducing poverty within an economy as whole.
Economic growth vs economic development
In the mind 20th century, economic growth and economic development were used synonymously. This is because it was believed that the well-being and standardsofliving would grow as the economy grows.
This view however started to change in the late 20th century, as it was noticed that even though the countries were experiencing economic growth, the poverty was still not going down and in some countries was even increasing.
As a result the economists developed a multiple dimensions to look at economic development through them. Some of those dimensions include:
Improvements in standard of living.
Reduction in poverty.
Increased access to goods and services.
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Note
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Tip
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Questions
Recap questions
1 of 5
Question 1
Recap question
An economist proposes a composite index I for economic development: I=w1S+w2P+w3G+w4U, where S is standard of living, P is poverty reduction, G is gender equality, and U is unemployment reduction, and the wi are positive weights summing to 1. Which property must hold for I to reflect the multidimensional nature of development?
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Note
Economic development is a broad concept that encompasses more than just increases in income or output. It involves improvements in various aspects of human well-being and quality of life. Think of economic development as a multidimensional process that transforms societies in positive ways.
DefinitionEconomic DevelopmentThe process of improving living standards, reducing poverty, and enhancing overall well-being in a society through sustainable economic growth and social progress.
Economic development includes social, political, and environmental progress, not just economic growth.
It focuses on sustainability, ensuring that future generations can also enjoy improved living standards.
Unlike economic growth, which can be measured by GDP alone, economic development requires looking at many different indicators.
AnalogyImagine a tree growing in a garden. Economic growth is like measuring the height of the tree, while economic development is like assessing the health of the entire garden - the soil quality, the diversity of plants, the availability of water, and the beauty of the flowers.ExampleWhile a country may experience a 5% increase in GDP (economic growth), true economic development would also involve improvements in education, health care, environmental quality, and social equality during the same period.
