Lecture notes Unit 3 - The global economy

3.6.2 Reducing poverty

 Economic growth
o The Increase in the counties national output
o Caused by increases in the quality of factors of production
 Causes an outward shift in PPF
 Economic development
o refers to standard of living, freedom, and life expectancy
o Indicates the quality of life for citizens
 International improvement in welfare
o Africa is top recipient of Chinese aid
o Aid provides temporary assistance
o Used to reduce human capital inadequacies
o However, aid is limited by corrupt leaders
 Poverty reduction policies
o FDI promotion
 Flow of capital from one country to another
o Microfinance skills
 Borrowing small amounts of money for lenders to finance their enterprises
 Increase the incomes of those who borrow and can reduce their dependency in
primary products.
 Multiplier effect from investment on loan
 Detach poor from high interest
 However, might not work if there is dishonesty where the money is spent
o Development of human capital
 allows people to earn more
 Primary school education has increased
 However secondary and tertiary education enrolment is still low
o