Development, Unemployment, Poverty and Lebanese Economic Policy
Development concepts
Distinguish growth (GDP increase) from development (well-being, HDI, literacy, life expectancy, inequality). Know measures: GDP per capita, HDI, Gini coefficient, poverty headcount, PPP adjustments. Development obstacles: low savings, capital scarcity, weak institutions, dependency, debt.
Unemployment
Types: frictional, structural, cyclical, seasonal. The rate = unemployed/labour force × 100. Okun's law links unemployment to output gaps. Policies: active (training, job creation) vs passive (benefits).
Poverty and Lebanese policy
Poverty is absolute (basic needs) or relative (to median). Lebanese challenges include high public debt, currency collapse, banking crisis, dollarisation, informal economy, reliance on remittances and services, energy shortages, and reconstruction needs. Policy responses: fiscal consolidation, debt restructuring, social safety nets, formalisation of employment, support for SMEs and exports.
Traps
- Equating high GDP per capita with high development.
- Counting discouraged workers as unemployed (they leave the labour force).
- Confusing structural (mismatch of skills) with cyclical (demand-deficient) unemployment.
- Assuming remittances appear in the trade balance rather than the current account transfers.
Worked example
If the labour force is 4 million and 600,000 are unemployed, the unemployment rate is 15%. If 200,000 discouraged workers leave the labour force, the rate falls to 600,000/3,800,000 ≈ 15.8% only if unemployment is unchanged; if they were counted as unemployed, the rate falls - always check the definition.