IB Economics Week 7

The week 7 revision ticklist for U6th IB economists and teachers.

Week 7: The Income Distribution and Economic Growth & Development

Revision Ticklist. Do you know…

Distribution of Income

Laffer Curve (Higher Level only)
Lorenz Curve and Gini Coefficient (Higher Level Only)

Sources of Economic Growth and/or Development

Natural factors
Human factors
Physical capital and technological factors
Institutional factors

Consequences of Growth

Externalities
Income Distribution
Sustainability

Barriers to Economic Growth and/or Development

Poverty Cycle
Institutional and political factors
International trade barriers
International financial barriers
Social and cultural factors acting as barriers

Growth and Development Strategies

Harrod-Domar model
Lewis Dual sector model
Types of aid (bilateral, multilateral, grant aid, soft loans, official and tied)
Export led strategies
Import substitution
Commercial loans
Fair trade organizations
Micr-credit
Foreign direct investment (FDI)

Evaluation of Growth and Development Strategies

Evaluation of aid versus trade
Market led versus interventionist

Role of International Institutions

International Monetary Fund (IMF)
World Bank
Private sector banks
Non-government organizations (NGOs)
Multinational/transnational corporations
Commodity agreements

Question Bank

Short Answer Questions [10 marks]

1) Explain two ways in which the international indebtedness of developing countries might hinder their growth and development

2) Explain the role of fair-trade organizations and micro-credit schemes in promoting economic development

3) Distinguish between an outward-oriented growth strategy and an inward-oriented growth strategy

4) Use the Harrod Domar model to explain the barriers to growth that may be faced by developing countries

5) Explain the consequences of a high real rate of economic growth for sustainable investment.

Essays

1a) Under what circumstances might a country achieve economic growth without development? [10]

b) Evaluate the effectiveness of outward-orientated strategies in achieving growth and development [15]

2a) Explain the main characteristics of a market economy [10]

b) Evalaute the proposition that economic development is best achieved through the market system [15]

3a) Explain the various types of aid which a developing economy might receive [10[

b)”Aid is an effective means of promoting development of poorer countries”. Evaluate this statement [15]