Chapter 12: Differences in Economic Development
Chapter 12 Summary
LO 12.1 Economic Growth and Factors that Influence Growth
- Economic growth refers to an increase in the value of goods and services produced by all sectors of an economy.
- Economic growth factors include geography and natural resources, education, and demographics.
LO 12.2 Explain the Human Development Index (HDI)
- The United Nations uses the Human Development Index to measure economic development based on health, education, and access to resources.
- Health is measured by life expectancy at birth.
- Education is measured by the age at which children enter school and the average number of schooling years for adults.
- Access to basic resources for basic life needs is measured by average income.
LO 12.3 Differences in Political, Economic, and Legal Systems
- The political economy of that country influences its economic development.
- Countries with a democratic political system, a market economy, and strong legal institutions promote innovation and entrepreneurship – the underlying economic growth and development factors.
LO 12.4 Differences in Economic Development and Cost of International Trade
- Economically developed countries are more suitable for business, while less developed countries may result in higher costs for conducting business.
- When deciding to do business in developing countries, organizations must thoroughly analyze the long-term benefits and costs associated with a given market.
