Development Economics: Growth versus Development, Barriers, Strategies and SDGs
What the exam tests
Development economics asks you to distinguish growth from development, identify barriers, and evaluate strategies, aid, debt relief and the SDGs. Strong answers use indicators, causal chains and context-specific evaluation.
Core rules
- Growth is rising real GDP; development is multidimensional: income, health, education, inequality, environment and freedom. HDI combines health, education and income indices geometrically.
- Barriers include low savings, weak institutions, poor infrastructure, conflict, commodity dependence, debt and human capital gaps.
- Strategies include import substitution, export promotion, microfinance, FDI, aid, debt relief and structural reforms. Each has trade-offs.
- The SDGs set 17 goals; aid can fill savings gaps but may create dependency and be tied or misused.
- Poverty traps occur when low income prevents saving and investment, reproducing low income.
Worked example
A country's real GDP grows 5% while population grows 3%. GDP per capita grows approximately (1.05/1.03 - 1) x 100 = 1.9%. If the Gini coefficient rises from 0.38 to 0.44, average income is higher but distribution may worsen. A development evaluation should ask whether school enrolment, child mortality and poverty rates improved, not only GDP. This is why HDI or multidimensional poverty indices can show a different picture from GDP per capita.
Traps
Do not equate GDP per capita with development. Do not say aid always works or always fails; evaluate governance, conditionality and absorptive capacity. Do not confuse debt relief with debt creation. Do not treat all developing countries as identical. Remember that export promotion requires market access and competitive capacity.