Topic 6 of 6 · Form 6
Economic growth, development and sustainability
Actual and potential growth; output gaps; the business cycle; causes (investment, technology, human capital); costs and benefits of growth.
Notes for this topic 1 file, in order
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Economic growth
Actual and potential growth; output gaps; the business cycle; causes (investment, technology, human capital); costs and benefits of growth.
Development
Living standards measures (GDP per capita at PPP, HDI, multidimensional poverty index); obstacles (dependence on primary products, debt, weak institutions, low savings, poor infrastructure); development strategies (industrialisation, import substitution, export-led growth, microfinance, foreign direct investment).
Population and labour
Demographic transition; dependency ratios; migration and remittances.
Sustainability
Environmental costs of growth; sustainable development; climate change policies (carbon taxes, tradable permits, renewable subsidies).
Worked example: Real GDP grows from US$40 billion to US$41.6 billion while population grows from 15.0 million to 15.3 million. Find the growth in real GDP per head.
Before: 2 666.7; after: 2 718.95 → growth ≈ 1.96%
Check yourself
- What is an output gap?
- Give two obstacles to development.
- Why might import substitution fail?
Show answers
- The difference between actual and potential output.
- Any two: debt, low savings, poor infrastructure, weak institutions, dependence on primary exports, corruption.
- Protected industries may become inefficient, costs rise and consumers face higher prices.
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