Economics: Understanding Economic Development
Economics: Understanding Economic Development tests development measures, sectors, credit and globalisation with data-based reasoning.
What the exam tests
The paper tests development as a multidimensional idea, the role of sectors, money and credit, and globalisation. You must distinguish income measures from welfare measures and explain how credit and trade affect households.
Core rules and concepts
- Per capita income = national income ÷ population; it hides inequality and non-income deprivations.
- Human Development Index combines health, education and income.
- Sectors: primary, secondary, tertiary; organised vs unorganised; public vs private.
- Employment: disguised unemployment, underemployment and casualisation.
- Credit: formal vs informal sources; terms include interest, collateral, repayment schedule and documentation.
- Globalisation: MNCs, trade, investment, technology and liberalisation; benefits and risks are uneven.
Worked example
Country A and Country B have the same per capita income, but A has lower life expectancy and literacy. A student writes that A is more developed because income is equal. The reasoning should reject that: income is only one dimension. HDI would rank A lower; development also depends on health, education, distribution and environmental quality. The answer should use the data, not a single average.
Traps that cost marks
- Equating higher GDP with better development.
- Confusing disguised unemployment with being paid less for the same work.
- Treating all credit as helpful; high-interest informal loans can trap borrowers.
- Assuming globalisation benefits all workers equally.