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How does economic development differ from growth, and what helps or hinders developing economies?

2.4 Economic development: the difference between growth and development, the measurement of development including the HDI, the barriers to development, and strategies to promote development.

An OCR H460 answer to economic development, covering the difference between growth and development, the measurement of development including the Human Development Index, the barriers to development, and market-based and interventionist strategies to promote it.

Generated by Claude Opus 4.811 min answer

Reviewed by: AI editorial process; not yet individually human-reviewed

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  1. What this dot point is asking
  2. Growth versus development
  3. Measuring development
  4. Barriers to development
  5. Strategies to promote development
  6. Examples in context
  7. Try this

What this dot point is asking

OCR wants you to distinguish economic growth from economic development, to explain how development is measured (especially the Human Development Index), to identify the barriers to development, and to evaluate strategies to promote it.

Growth versus development

Development therefore captures the quality of life, not just the quantity of output. A country can grow rapidly yet show weak development if health, education and equality lag behind.

Measuring development

Other measures include the Multidimensional Poverty Index, the Gini coefficient (inequality), and indicators of access to clean water, sanitation and the internet. No single measure is complete, so development is best judged using several.

Barriers to development

Developing economies face overlapping barriers:

  • The savings gap. Low incomes mean low saving, so low investment in physical and human capital (the Harrod-Domar idea), trapping countries in poverty.
  • Weak institutions and corruption. Poor governance, insecure property rights and corruption deter investment and misallocate resources.
  • Poor infrastructure (transport, energy, water) raises costs and limits growth.
  • Primary-product dependency. Reliance on a few commodity exports exposes a country to volatile prices and deteriorating terms of trade (the Prebisch-Singer hypothesis).
  • Debt burdens, capital flight, conflict and political instability, and low human capital (poor health and education) all hold back development.

Strategies to promote development

  • Market-based: trade liberalisation (exploiting comparative advantage), attracting foreign direct investment by multinationals (bringing capital, jobs and technology), microfinance, and removing distortions to let markets work.
  • Interventionist: government and aid-funded investment in infrastructure, education and health (human capital), development of manufacturing to diversify away from primary products, and debt relief. The right mix is debated: market-led growth can be fast but uneven, while interventionist strategies risk government failure but can build the foundations markets need.

Examples in context

  • The Asian growth model. Countries such as South Korea combined export-led growth, investment and education to move from low-income to high-income status.
  • Commodity dependence. Economies reliant on a single commodity (oil, copper, cocoa) illustrate primary-product dependency and price volatility.
  • Microfinance. Small loans to entrepreneurs in low-income countries are a market-based development strategy, with mixed evidence on impact.

Try this

Q1. State the three dimensions of the Human Development Index. [3 marks]

  • Cue. Life expectancy (health), education (schooling), and real income per capita (standard of living).

Q2. Explain one barrier to economic development. [3 marks]

  • Cue. For example the savings gap: low incomes mean low saving and so low investment, limiting growth.

Exam-style practice questions

Practice questions written in the style of OCR exam questions on this dot point, with worked answer explainers. The year tag is the paper they imitate, not the source.

OCR H460/02 20215 marksExplain why the Human Development Index may be a better measure of living standards than real GDP per capita.
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A short structured question. State that the HDI is a composite index combining three dimensions: a long and healthy life (life expectancy), knowledge (schooling) and a decent standard of living (real GNI per capita).

Develop the chain: real GDP per capita measures only income, ignoring health and education, the distribution of income, and non-material well-being. The HDI captures health and education directly, so two countries with the same income can differ in development if one has better health and schooling. This makes the HDI a broader, more multidimensional measure of living standards and development.

Markers reward naming the three HDI components and explaining at least one way it improves on income alone.

OCR H460/02 202312 marksAssess the view that a lack of investment is the main barrier to economic development in low-income countries.
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A levels-of-response question. Knowledge and application: define development and explain the role of investment (physical and human capital) and the savings gap (the Harrod-Domar idea that low incomes mean low saving and so low investment).

Analysis: develop how low investment limits productive capacity and traps countries in poverty.

Evaluation: weigh against other barriers: weak institutions and corruption, poor infrastructure, the primary-product dependency and volatile commodity prices, debt, conflict, capital flight and a lack of human capital (health and education). Conclude with a supported judgement that low investment is a major barrier but interacts with institutional and structural factors, so it is rarely the single cause.

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