Development Economics in 2025: Challenges and Opportunities for Emerging Markets - Livestream Notes

As we move into 2025, development economics remains a critical field for understanding global growth, inequality, and economic transformation.

The latest Tutor2u Economics Livestream tackled some of the most pressing issues in development economics, encouraging students to analyze and evaluate key topics such as:

• The impact of faster growth in BRICs economies on developing nations.
• The consequences of primary product dependency and how it affects countries like Ghana.
• The effects of inward Foreign Direct Investment (FDI) on low- and middle-income countries.
• The benefits and drawbacks of international trade for developing economies.

This session provided valuable insights into the complexities of economic development, offering real-world examples and policy discussions.

Key Takeaways from the Livestream

1. The Rise of BRICs and Its Impact on Developing Countries

With rapid economic growth in China, India, and Brazil, other developing economies experience both opportunities and challenges. A 1% increase in GDP in these major emerging markets can boost GDP in other developing economies by nearly 2% within three years, largely due to increased demand for imports and remittance flows. However, supply-side limitations and the monopsony power of large firms can limit the benefits for smaller economies.

2. The Dangers of Primary Product Dependency

Countries like Ghana, which exports over 80% of its cashew nuts in raw form, lose out on significant value-added profits. This reliance on primary products exposes nations to volatile global prices, reducing government revenue and increasing economic instability. Additionally, environmental degradation from over-reliance on commodity exports further threatens sustainable growth.

3. The Role of Foreign Direct Investment (FDI) in Development

FDI can be a double-edged sword. On the positive side, it brings technology transfer, productivity gains, and infrastructure investment. However, it can also lead to environmental degradation, resource exploitation, and limited integration with local economies, meaning that the long-term benefits are not always evenly distributed.

4. Trade and Globalisation: A Path to Growth or a Risky Gamble?

Trade between developing nations has expanded rapidly, with “South-South” trade now accounting for 24% of global trade, up from 15% in 2005. Benefits include higher economic growth and job creation, particularly in export-led industries like textiles and electronics. However, reliance on external markets exposes economies to global shocks, such as the COVID-19 supply chain crisis.

Free Download: PowerPoint Slides for Revision and Teaching

For students and teachers looking to dive deeper into these topics, the PowerPoint slides from this session are available as a free download. These resources are great for A-Level revision and teaching, providing essential charts, real-world case studies, and key evaluation points.

Glossary of Key Terms

• BRICs – An acronym for Brazil, Russia, India, and China, referring to major emerging economies.
• Primary Product Dependency – When a country relies heavily on the export of raw materials rather than processed goods, making it vulnerable to price fluctuations.
• Foreign Direct Investment (FDI) – Investment made by a foreign entity into business interests in another country, often involving multinational corporations.
• Monopsony Power – When a single buyer (e.g., a large corporation) has significant control over a market, allowing it to dictate prices.
• Technology Transfer – The process by which new technology developed in one country is introduced to another, often through FDI.
• Comparative Advantage – The ability of a country to produce a good or service at a lower opportunity cost than others, forming the basis of trade.
• Gini Coefficient – A measure of income inequality within a country, where 0 represents perfect equality and 1 represents maximum inequality.
• South-South Trade – Trade between developing countries, which has been increasing in significance in recent years.