Edexcel AS/A Level Economics revision

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....

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 eco...

Protectionism is any attempt to impose restrictions on trade in goods and services.  Types of protectionist barriers:  Economic:  Tariffs - tax on imports.  Subsidies - payment by the government to domestic firms in order to reduce the price of domestic products so they undercut imports.  Quotas - a limit on the quantity of a certain import.  With quotas, as supply is limited, prices increase. Often this increase offsets the reduction in quantity sold. This means foreign firms could potentially profit from quotas. Similarly, this is why they may self-impose a voluntary import restraint.  However, the government is better off imposing tariffs as with quotas they do not collect any tax revenue.  Voluntary export restraint - when a country sets a limit on quantity at the point of export (self-imposed).  Regulation - this limits the quantity of a good/service imported or makes it more expensive and so less c...

Balance of payments The current account and capital/financial accounts must balance, so current account +  capital/financial accounts = 0.  Current account: Balance of Trade - Trade in goods . So value of good exports - value of good imports   - Trade in  services. So value of service exports - value of service imports.  Net investment income  Net investment abroad, in the form of interest, profit, dividends, etc  Net profit income, net interest income, etc  Net transfers  Transfers for which no good or service is exchanged such as EU payments, aid, remittances.  Capital and financial accounts  Capital account + financial account  The value of change in ownership of assets, currency, etc . Records net change in ownership of foreign assets, flows of money associated with loans, investment and speculation.  To have a current account surplus, a country must run a ...