REVIEW QUESTIONS
1. Cite five (5) major issues of economic development in the world today.
 Recession – A recession is defined as a dramatic drop in economic activity that lasts
months or even years. A recession is declared when a country's economy sees negative
GDP, rising unemployment, declining retail sales, and contracting measures of income
and manufacturing over an extended time. Recessions are an inescapable component of
the economic cycle or the regular cadence of expansion and contraction in a country's
economy.
 Unemployment – Is a crucial economic indicator since it indicates people's ability (or
inability) to find work opportunities and contribute to the economic output.
Unemployment refers to those who are employable and actively seeking employment but
cannot obtain employment. Included in this group are employed individuals who do not
have suitable employment. More unemployed workers result in decreased economic
output.
 The term "inflation" refers to a rise in prices, resulting in a loss of purchasing power over
time. Over time, the average price increase of a basket of chosen goods and services can
be used to determine the rate at which buying power is decreasing. A unit of money now
effectively has less purchasing power than it had in earlier periods due to increased prices,
which is frequently stated as a percentage. Conversely, deflation is characterized by a
drop in prices and a rise in purchasing power.
 Poverty is the inability to afford basic necessities such as food, clothing, and shelter.
However, poverty is significantly more than just a lack of money. "Poverty is hunger,"
explains the World Bank Organization. Poverty is linked to issues such as poverty and
unemployment, inadequate childcare, a lack of access to health care, dangerous
neighborhoods, and under-resourced schools, all of which harm children. In addition to
hunger and malnutrition, its expressions include limited access to education and other
essential services, social prejudice and marginalization, and lack of involvement in
decision-making.
 Changes in temperatures and weather patterns that last for a long time are called "climate
change." It affects the social and environmental factors that affect health, like clean air,
safe water to drink, enough food, and a safe place to live.Different parts of society are
affected by climate change in different ways. Droughts can make it hard to grow food and
hurt people's health. Flooding can cause the spread of diseases and damage to
ecosystems and buildings. Human health problems can make people die younger, make
it harder to get food and make people less productive at work. The effects of climate
change can be seen in every part of our world.
2. What matters for growth is not so much the rate of investment but the efficiency with which it is
used and the policy environment in which it takes place.’ Discuss this statement using relevant
data and literature relating to at least two developing countries.
3. Why did so many countries in Sub-Saharan Africa experience economic stagnation in the 1980s
and 1990s? Is there any evidence of recovery in the last decade?
Inadequate economic policies, insufficient human capital development, and low levels of
private investment contributed to economic stagnation throughout the 1980s and 1990s. Apart
from that, Africa's lack of openness to foreign markets and geographical constraints, such as lack
of access to the sea and tropical temperature, have contributed to the continent's slow growth.
Sub-Saharan African nations are improving economically, showing stronger economic
policies and structural reforms. These countries have reduced domestic and external financial
imbalances, enhancing economic efficiency. They prioritized government spending on health,
education, and other critical social services. A more open and participatory government that
promotes state-civil society partnership is also increasing. War disrupted the economies of
numerous countries throughout the 1990s, while others sought structural adjustment programs.
Sub-Saharan Africa expanded between 1995 and 1997, according to data. In 1995-97, per capita,
real GDP growth rose to 1.2 percent from -2.2 percent in the 1980s and -2.2 percent in 1990-94.
Per capita, real GDP grew in 16 countries between 1990 and 1994 but in twice as many between
1995 and 1997. The analysis found that countries with negative or decreasing growth rates
typically did so due to long-term economic challenges and political unrest.
4. The rapid economic growth of China and India in the last twenty years owes much to the size of
their economies, so their experience cannot be replicated in smaller economies.’
The two nations have witnessed tremendous economic expansion, resulting in notable
accomplishments, especially in eradicating poverty. In addition, they share difficulties associated
with rapid growth, such as the expanding wealth gap between rural and urban areas and
environmental deterioration. Rising earnings stimulate structural change in the farm and food
industries as demand and consumption patterns shift; the repercussions will also extend to trade,
commerce, and investment. Agriculture has undergone significant expansion in both China and
India. Indeed, the transition of these economic behemoths, whose growth rates have been
recorded in recent years (decades in the case of China), would have far-reaching impacts,
domestically and globally. These consequences, which are already observable, are a combination
of new market opportunities resulting from increased purchasing power and increased
competitiveness of these big economies as producers of particular goods. The rising incomes in
these nations will continue to pressure their agriculture/rural development and food sectors to
undergo a structural transformation to adapt to shifting consumer preferences. Changing
earnings will also increase chances for bilateral trade with countries in the region and the rest of
the world. According to a United Nations report, China and India have a combined population of
approximately 37% of the world's total. A 100-dollar rise in the per capita income of these two
nations would generate an additional 230 billion dollars in commodity demand. Therefore, the
continuous rise of these two large nations will substantially impact the trade balance and
direction, trading opportunities, and level playing field for the region's smaller nations. It
necessitates a prompt diagnosis of the growth pattern in these emerging economies so that
policies can be implemented to maximize profits and minimize losses and marginalization.
5. What is the relation between economic growth and economic development?
Economic growth is considered one-dimensional because it only looks at how much
money people make in a country. It is a quick process that has a measurable effect on the
economy. It makes things like per capita income and GDP go up, among other things. Economic
development is seen as a multidimensional process because it focuses on how much money
people make and how they can improve their standard of living. It is a continuous process that
has both qualitative and quantitative effects on the economy, such as an increase in the life
expectancy rate, the number of babies who can read, the number of people living in poverty, and
the death rate. Economic Development includes Economic Growth as one of its parts. The idea of
economic development is more important than the idea of economic growth. Economic
development looks at many different things to determine how well an economy is doing.
However, economic growth only looks at certain things, like the gross domestic product, individual
income, etc., to determine how well an economy is doing. Economic development, on the other
hand, can be thought of as an increase in an economy's or nation's wealth for the good of its
people. This is the opposite of economic growth.