The role of domestic factors

Introduction

This page looks at the role that a nation's domestic factors play in creating an environment conducive to economic development. Under the old syllabus this page was covered under unit 4.3.

Enquiry question

What role do the following factors play in contributing towards economic development - investments in education and health, the use of appropriate technology, access to credit / micro-credits, the empowerment of women and a more equal income distribution.

Lesson time: 2 hours

Lesson objectives:

With reference to a specific developing economy, and using appropriate diagrams where relevant, examine how the following factors contribute to economic development.

a. Education and health
b. The use of appropriate technology
c. Access to credit and micro-credit
d. The empowerment of women
e. Income distribution.

Teacher notes:

1. Beginning activity - begin with the opening activity, which contains a graphing exercise. (Allow 10 minutes in total)

2. Processes - technical vocabulary - the students can learn the background information from the videos, activities and key terms which can be downloaded as a PDF. Allow 10 minutes for reading the key terms.

3. Applying the theory - this page is divided into a range of factors that play a role in development. Activity 2 focuses on the role of geographical luck, activity 3 on the importance of empowering women and 4 and 5 on the role of micro loans. (20 minutes)

4. Developing the theory - activities 6 and 7 contain short answer and discussion on the role of appropriate technology in development. (20 minutes)

5. Discussion - activity 8 - does a high level of corruption act as a barrier to development. (10 minutes)

6. Discussion - activities 9 - 11 focus on the question, does inequality actually matter to development? (25 minutes)

7. Case studies - activities 12 - 14 focus on two nations considered development success stories, at very different stages of that Development process - South Korea and Rwanda - allow 25 minutes for discussion.

Key terms:

Micro-credits / micro loans - very small loans made to often impoverished borrowers who typically lack collateral, steady employment, or a verifiable credit history.

Appropriate technology - machinery and technology that is cheaper and more appropriate for LEDCs than conventional technology used in wealthier nations.

The activities on this page are available as a PDF file at: Role of domestic factors

Activity 1: The connection between economic growth and development

The world's fastest growing economies 2006 - 2021

Country	Growth in GDP annual % 2006 - 2021	Growth in HDI 2006 - 2021 %
Qatar	13.0	5
Turkmenistan	11.0	4.5
Ethiopia	10.8	57
Azerbaijan	10.1	25
China	9.5	42
Mongolia	9.2	32.6
Angola	8.9	36
Sierre-Leone	8.5	41
Panama	8.5	14.7
Timor-Leste	8.4	50

1. Using graph paper illustrate the above on two axis.

2. What does the above table suggest about the link between economic growth and economic development?

Activity 2: The role of luck in determining different levels of development between nations (discussion activity)

Watch the following short video entitled 'Guns, germs and steel' and then discuss the role of luck in determining different levels of development between nations.

In groups discuss the following factors identified in the video:

(a) The difficulty of domesticating animals in different continents

(b) The effect of climate

Activity 3: The role of female empowerment in development

Use the information contained in the following video to answer the questions that follow:

(a) Explain the importance of empowering women as a way of driving development in an LEDC.

When women have the control of their own finances then this can lead to significant reductions in poverty. Greater financial power allows women to send their children to school, improve nutrition and make home improvements at home.

(b) What role does the UN play in empowering women?

The UN provides women with access to the capital that they need to improve their own lives but also their families life.

This as allowed women to access small loans so that they can set up their own micro businesses. Women have a good track record of repaying their loans.

Activity 4: The role of micro-credits

Watch the following short video which focuses on the role of micro-credits:

(a) Explain the term micro-credits.

Micro-credits / micro loans are very small loans loans made to often impoverished borrowers who typically lack collateral, steady employment, or a verifiable credit history.

(b) Explain the role that micro-credits play in empowering women in LEDCs.

85% of micro loans are made to women, who use them to set up or invest in small businesses and so provide a source of income for their families.

Micro credits have a 97% repayment rate and offer returns of 2-6% per year, comparable with those offered by commercial banks.

Activity 5: Micro-credits in Bangladesh

More than 10 million people, the majority of them women, have used the micro credit / micro loan system, with the nation sometimes calling itself the home of the micro-credit. Read the following article and then discuss the success of the scheme in alleviating poverty and assisting development.

Article: Micro-credits

The article portrays the success of the scheme through the 10 million Bangladeshis lifted out of poverty between 1990 and 2008. However critics of the scheme point to the fact that in reality very few of those people taking out the loans drastically improved their living standards with many staying at around the same level and stories of suicides and stress caused by having to make the repayments.

Activity 6: The role of appropriate technology

Using information from the following video explain the role that appropriate technology plays in development within LEDCs.

(a) What is meant by 'appropriate technology'?

Technology that is cheaper and more appropriate for LEDCs than conventional technology used in wealthier nations e.g. peat stoves, ceramic water purifiers and adapted computers

(b) Highlight the biggest challenge facing companies looking to provide appropriate technologies.

To make the products they sell viable financially - there must be a market for it to be successful.

The idea behind many of the appropriate technologies is that they are affordable and often fulfil a practical function in rural communities, making them suitable for small businesses and hence eligible for micro-credit schemes.

Activity 7: The role of appropriate communications technology

Explain how appropriate technologies can be used in the communications sector.

Traditional communications technology is not appropriate in many LEDCs, particularly in rural areas, being too expensive and regularly breaking down. More appropriate communications technology, for example, uses cell phone technology which is widely available in Africa and allows services e.g. doctors to share / access information on line without access to the technology. It plays a particular role in the education, health and agricultural sectors.

Activity 8: The role of stable institutions

The diagram below shows a world map, representing the 2018 Corruption Perceptions Index. This measures the perceived level of corruption 'among public officials and politicians'. The blue regions indicate low levels of perceived corruption whereas the red regions represent higher levels of perceived corruption. Countries are ranked out of a potential score of 100, with the highest numbers representing nations that have low levels of perceived corruption.

How does corruption hinder economic development?

Activity 9: The role of inequality - just how unequal is the world?

Watch the following short video and then answer the questions that follow:

(a) According to the video just how unequal is the world currently?

This is probably best summarised by the following statistic: the richest 2% of people in the world posses around half the worlds wealth, with the bottom 80% owning just 6%

(b) What is the ratio between the worlds wealthiest and poorest nations.

In pre-colonial times the wealthiest nations were approximately 3 times richer but are now more like 85 times wealthier - this is not compensated by AID payments to the worlds poorest nations.

Debt relief paid by LEDCs and unfair trade rules, which favour the already Developed nations.

(d) If Bill Gates was a country how rich would he be?

The following table illustrates the world's richest people in 2018:

Rank	Individual	Current wealth $bs	Source of wealth	GDP rank if they were a nation
1	Jeff Bezos	133	Technology businesses	56 (position currently occupied by Ukraine)
2	Bill Gates	92.3	Founder of Microsoft	63 (position currently occupied by Kenya)
3	Warren Buffett	85.5	Property / business	65 (Oman)
4	Bernard Arnault	84.9	LVMH CEO	65 (Oman)
5	Mark Zuckerberg	76.8	Founder of Facebook	70 (Luxemburg)
6	Amancio Ortega	70	Co-founder of Zara	70 (Luxemburg)
7	Carlos Slim Helu	65.4	Engineering companies in Mexico	72 (Panama)
8	David Koch	60.8	Koch Industries	75 (Croatia)
9	Charles Koch	60.8	Koch Industries	75 (Croatia)
10	Larry Ellison	57.5	Founder of Oracle	80 (Lebanon)

Activity 10: A focus on income inequality in Brazil

The following video focuses on wealth inequality, a nation with one of the highest rates of wealth inequality in the world. Explain the measures that the government has taken to reduce inequality in the nation.

The gap has been narrowed by financial aid and a booming economy that has raised wages and lower unemployment, though according to the worlds Gini index remains one of the worlds more unequal nations on the planet.

Activity 11: Does inequality matter to Development?

Watch the following two videos and then answer the question: Does income / wealth inequality matter?

And now for the opposing view:

Activity 12: A focus on South Korea

Start by watching the following short video and then complete the activities that follow:

The success of South Korea is illustrated in the following table, particularly when compared with its neighbour to the north.

	1970	1980	1990	2000	2010	2020
North Korea	384	622	735	452	462	640
South Korea	286	1,805	6,501	10,570	12,155	31,849
Pakistan	226	341	480	575	556	1,090
Saudi Arabia	921	11,998	7,810	7,765	8,859	20,100
Senegal	225	553	826	523	475	1,488

(a) Using a piece of graph paper illustrate the above on a graph to demonstrate the success of the economy.

(b) According to the video what strategies can South Korea's development be attributed to?

Hint:

The move over time towards higher valued added production by replacing labour intensive industries with machinery.

Investments in education and training to improve productivity

Sound fiscally prudent policies

Political stability

Factors to consider:

Lack of natural resources (is this good or bad)

Significant help from the US wanted to avoid the nation falling to Communism.

Absence of religion.

Activity 13: A focus on Rwanda

Watch the following short video on Rwanda, an African success story and then complete the activities which follow:

Much like South Korea 50 years ago, Rwanda's road to economic growth and development began only after reaching rock bottom, following a civil war and alleged 'genocide' which claimed the lives of many hundreds of thousands people. Like South Korea 50 years ago Rwanda used very similar policies - a focus on improvements to education and health services and fiscal discipline. This has created one of the most business friendly cultures on the continent and means that the nation is able to attract significant inward investment from foreign businesses.

Activity 14: Rwanda, the Singapore of Africa

For more information on how Rwanda is performing post civil war watch the following short video and read the accompanying handout.

Article: Rwanda the Singapore of Africa

IBDP Economics - Student pages

INTHINKING REVISION SITES

www.StudyIB.net