Edexcel AS/A Level Economics revision

Competitiveness   The ability of an economy to compete fairly and successfully in markets for internationally traded goods, allowing for rising living standards over time.  Measures of competitiveness: Price competitiveness -  Relative unit labour costs:  Labour costs of supplying goods per unit output expressed in relative terms. This is then compared to that of other countries, and expressed as an index number.  This measures productivity.  This is used as a measure, as:  - Almost all firms use labour  - Labour costs reflect the quality of capital (i.e if a few workers produce a lot of output, this indicates extensive/efficient capital)  - Labour is uniform in all economies, so can be compared  Relative export prices:  The ratio of one country's export prices relative to another country's, expressed as an index. The lower the relative export price, the more competitive the country.  A measure of a country's advantage/disadvantage in selling

Interventionist approaches to development  Development of human capital  Human capital is the economic value of a worker's skill set - workers can become more skilled through education.   Promotes growth as:  More skilled workers are more productive, and an increase in productivity shifts out AS, generating growth.  Greater innovation, so long term growth and higher living standards.  Lower levels of structural unemployment as the labour force will be more adaptable to changes in the labour market (due to innovation, etc.)  By developing human capital, the country can move their production up the supply chain from primary products, to manufactured goods and to services, which can earn them more. e.g Brazil - anti-poverty programmes include the investment in education and training by the government in order to build up human capital. The programmes have helped reduce extreme poverty from 23% in 1993 to 8.3% in 2009.  Uganda have provided free schoo

Market orientated approaches to development Trade liberalisation  The removal or reduction of restrictions on free trade/protectionist barriers (e.g tariffs, quotes, etc.) Promotes growth as:  Lead to GDP/output increase through specialisation and so greater world growth. World GDP can be increased using free trade, since output increases when countries specialise in goods that they have a comparative advantage in. Therefore, living standards might increase and there could be more economic growth.  Lower prices for consumers as the added cost of the tariff/quota isn't passed on to them.  Increased competition between firms (as foreign firms become more competitive), which increases efficiency, leads firms to try and cut costs.  e.g  Zambia copper mining and trading machinery (capital equipment) imported from China.  In lifting trade restrictions and joining the WTO, China has become a massive power in the global economy. It is the number one exporter in t