How does economic development differ from growth, how is it measured, and what holds developing economies back?
Economic development and developing economies: the difference between growth and development, the measurement of development including the Human Development Index, the characteristics of developing economies, and the barriers to development.
An Eduqas A520 answer to economic development, covering the distinction between economic growth and economic development, the measurement of development including GDP per capita and the Human Development Index, the common characteristics of developing economies, and the main barriers to development.
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What this dot point is asking
Eduqas wants you to distinguish economic growth from economic development, explain how development is measured (including the Human Development Index), identify the common characteristics of developing economies, and analyse the barriers to development. This sets up the final topic on the strategies used to promote development.
Growth versus development
Measuring development
Characteristics of developing economies
Developing economies are diverse, but commonly share several features:
- Low GDP per capita and widespread poverty.
- Reliance on primary-product exports (agriculture, minerals) with volatile prices.
- A large informal (untaxed) sector and high underemployment.
- Rapid population growth and a young age structure.
- Poor infrastructure (power, transport, water) and limited access to healthcare and education (low human capital).
- Low savings and investment, weak financial systems, and often high inequality.
Barriers to development
Examples in context
- The HDI rankings. Countries with similar incomes can differ markedly in life expectancy and schooling, illustrating why development is broader than GDP.
- Commodity dependence. Economies reliant on a single export (oil, copper, cocoa) suffer volatile revenues, a classic barrier to stable development.
- The savings gap. Low-income economies struggle to finance the investment needed to grow, the rationale for aid and FDI.
Try this
Q1. Explain the difference between economic growth and economic development. [4 marks]
- Cue. Growth = a rise in real GDP (quantitative); development = a broad improvement in living standards and welfare (health, education, poverty, freedom). Growth need not deliver development.
Q2. Explain one barrier to development faced by many low-income economies. [4 marks]
- Cue. For example the savings gap (low incomes give low savings and investment), the foreign-exchange gap, debt, poor governance and corruption, or dependence on volatile commodities.
Exam-style practice questions
Practice questions written in the style of WJEC Eduqas exam questions on this dot point, with worked answer explainers. The year tag is the paper they imitate, not the source.
Eduqas Component 1 20192 marksState the three dimensions measured by the Human Development Index (HDI).Show worked answer →
A 2-mark knowledge question. Award the marks for the three components of the HDI.
The HDI combines three dimensions: a long and healthy life (measured by life expectancy at birth), knowledge (measured by mean and expected years of schooling), and a decent standard of living (measured by gross national income per capita, at purchasing power parity).
Markers reward all three (health/life expectancy, education/schooling, and income/GNI per capita). Naming only GDP misses the point that the HDI is broader than income alone.
Eduqas Component 3 Section C 202212 marksEvaluate the view that GDP per capita is an inadequate measure of a country's level of development.Show worked answer →
A levels-of-response essay. Knowledge and application: distinguish growth (a rise in real GDP) from development (a broad improvement in living standards and welfare). Explain what GDP per capita measures and its limitations (it ignores distribution, the informal economy, non-marketed output, the environment, health and education).
Analysis: develop why broader measures such as the HDI (health, education and income) give a fuller picture.
Evaluation: weigh that GDP per capita is still a useful, available and comparable indicator strongly correlated with many development outcomes, that the HDI has its own limitations (it omits inequality, the environment and political freedom), and that no single index captures development fully. Conclude with a supported judgement that GDP per capita is necessary but not sufficient, and is best used alongside the HDI and other indicators.
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Sources & how we know this
- Eduqas A Level Economics Specification (A520) — Eduqas (2015)