4.

7
Sustainable development is development that meets the needs of current generations,
without sacrificing the ability of future generations to meet their needs.

There are 3 main ideas surrounding sustainable development:

■​ Social sustainability: When an economy can develop social systems allowing

both its current and its future populations to live better lives
■​ Economic sustainability: When an economy allocates its scarce resources so
that both its current and its future populations can use them without being
disadvantaged
■​ Environmental sustainability: When an economy uses the planet's natural
resources so that both its current and its future populations can use them without
being disadvantaged

The Sustainable Development Goals (SDGs) are targets set by the United Nations
aimed at achieving peace, prosperity, and sustainability by 2030. It consists of 17 goals
that all UN member states have as a goal to achieve -No poverty, No hunger, Good health
and well-being, Quality education, Gender equality, Clean water and sanitation, Affordable
and clean energy, Decent work and economic growth, Industry, innovation, and
infrastructure, Reduced inequalities, Sustainable cities and communities, Responsible
consumption and productionClimate action, Life below water Life on land, Peace, justice,
and strong institutions, paetership for goals.
Although many households, firms, and countries all have the goal of growth, there are
many other aspects of economic development.

4.8
Growth alone is not enough to achieve the goals of eradicating poverty, solving climate
change, and increasing job opportunities.

Other factors at play include:

■​ Income inequality
■​ Gender inequality
■​ Unemployment
■​ Quality of education

Single Indicators (AO2)

Single indicators are ways to measure economic development, using just one variable.
Examples include:
■​ GDP/GNI per capita at Purchasing Power Parity: Measures the value of all
finished goods and services the economy produces, divided by the amount of
people in that economy, and adjusted for purchasing power.
■​ Health and education indicators: Measures values such as average lifespan at
birth and literacy rates.
■​ Economic/social inequality indicators: Measures inequality levels, such as the
Gini coefficient.
 ■​ Energy indicators: Measures the availability of energy/electricity.
■​ Environmental indicators: Measures values such as carbon emissions,
temperature changes, deforestation, and air quality levels.

Composite Indicators (AO2)

Composite indicators are ways to measure economic development, by combining multiple
single indicators. This allows them to provide better insight into an economy's
development. Examples include:
■​ Human Development Index: Measures development using healthcare,
education, and income levels.
■​ Gender Inequality Index: Measures inequality using reproductive health,
empowerment and labor market participation.
■​ Inequality-Adjusted Human Development Index: The Human Development
Index, but considers how its factors (healthcare, education, and income) is
distributed in the population.
■​ Happy Planet Index: Measures human and Earth's well-being using well-being,
life expectancy, inequality, and ecological footprint.

Single Indicators (AO3)

Strengths:
■​ Relatively easy to measure
■​ Requires less processing, and no formula needs to be created
■​ Can be analyzed alongside other single indicators to make people see the whole
state of a country

Weaknesses:
■​ Only reveal information about one very specific category
■​ Does not reveal the whole picture of an economy's development, despite many
using them that way
■​ GDP per capita is often used for measuring how rich people
are, even though it does not measure that, and is just one
indicator.
■​ They do not account for outside effects
■​ If there was a major earthquake in a country, its life
expectancy indicator will go down even though this was a
one-off event the economy had no control over
■​ Can be easily tampered with

Composite Indicators (AO3)

Strengths:
■​ Provide a more holistic view of the economy
■​ Includes more variables, and may hence be a more accurate way to measure
economic development
Weaknesses:
■​ It may be unclear how much reasoning is put into creating the formulas
■​ For the "Happy Planet Index", the formula is (Well-being x
Life expectancy x Inequality) / Ecological footprint. Why? And
how do we know this is accurate?
■​ It requires more processing, and more data points are needed; Many countries
may not have all the needed figures available until many years later
■​ Can be tampered with

Economic growth is the sustained increase in the value of a country's real GDP over time.

Economic development includes economic growth, but also considers the quality of life
and the planet.

Therefore, economic growth generally brings economic development alongside it, but this
is not guaranteed. Many countries with high economic growth rates have bad economic
development figures.
■​ Growth may increase inequality, pollution, and conflicts, reducing development.
■​ However, growth may also alleviate poverty, increase efficiency, and lead to
increased government spending on education and healthcare, increasing
development.
4.9

This is a poverty cycle.

A poverty cycle shows how being poverty will result in entrapment in poverty, from one
generation to the next.

You will be expected to both explain how the cycle works as well as draw it. The syllabus
says all you need is "any linked combination of factors that perpetuate poverty". This is
one such cycle.
No basic education​
= You will not find high-paying jobs​
= You will have little money left​
= You will have little to invest (in yourself or in others)​
= You will have a low productivity​
= You will be unable to attain a basic education
There are various economic barriers to economic growth/development.

■​ Rising economic inequality: Higher inequality prevents development for all

■​ Lack of access to infrastructure and appropriate technology (highways,
railroads, internet, etc.)
■​ Low levels of human capital - lack of access to healthcare and education:
Less education or healthy people = less knowledge and productivity
■​ Dependence on primary sector production (fishing, mining, farming, etc.):
One bad yield one year and the economy suffers greatly.
■​ Lack of access to international markets: Less trade = less efficiency
■​ Informal economy: Economic activity not officially recorded, regulated, or taxed.
More of this prevents government revenue, and hence development.
■​ Capital flight: When households/firms take their money/resources out of a
country due to low confidence. This hampers consumption and investment,
preventing growth and development.
■​ Indebtedness: When countries owe money. Debt servicing costs mean the
country will have to focus on repaying loans over investing in its economy,
hampering economic growth and development.
■​ Geography: Landlocked countries have no access to ports (trade), dry countries
have little access to agriculture
■​ Tropical climates and endemic diseases: Many diseases such as malaria are
most common in tropical climates, which may hinder economic development

There are also various political and social barriers to economic growth/development.
These include:

■​ Weak institutional frameworks

■​ Weak legal system: Strict/authoritative laws or an
unpredictable court will prevent proper investment, hindering
growth/development.
■​ Ineffective taxation structures: Too high taxes discourage
hard work, too low taxes prevent a proper redistribution of
income.
■​ Weak banking system: Less developed banks mean less
borrowing and hence investment.
■​ Weak property rights (both physical items like land as well
as copyrights/patents): A lack of enforcement of such rights
will discourage investment (as it becomes risky) and
innovation (as others can just copy).
■​ Gender inequality: Gender inequalities decrease general well-being, and
reduces productivity. This hinders growth/development.
■​ Lack of good governance/corruption: Bribery makes economies seem less
trustworthy, decreasing investment and confidence, and is detrimental to
economic development in the long run.
 ■​ Unequal political power and status: Those with high power/status will likely
prioritize themselves, leaving those with less money and power behind. This will
increase inequalities, hampering economic development.

All the economic and political/social barriers listed earlier, as well as the poverty cycle,
create difficulties for creating economic growth and/or economic development in countries.
So how do we find the significance of the different barriers? Well, it depends. For example:
■​ In the Democratic Republic of the Congo, the main barriers are political/social.
They have immense deposits of valuable resources, but lack proper governance
(contrary to its name, it is not a very democratic republic).
■​ In Costa Rica, the main barriers are economic. They have a very stable political
system (one of the least corrupt and most democratic in the world), but lack
natural resources and rely on agriculture.

The significance varies depending on context, and you will have to evaluate and compare
& contrast them depending on the example.

4.10