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Watch this video on the complexities of providing economic aid in Africa.

Key concepts and summary

The fundamentals of growth are the same in every country: improvements in human capital, physical capital, and technology interacting in a market-oriented economy. Countries that are high-income tend to focus on developing and using new technology. Countries that are middle-income focus on increasing human capital and becoming more connected to technology and global markets. They have charted unconventional paths by relying more on state-led support rather than relying solely on markets. Low-income, economically-challenged countries have many health and human development needs, but they are also challenged by the lack of investment and foreign aid to develop infrastructure like roads. There are some bright spots when it comes to financial development and mobile communications, which suggest that low-income countries can become technology leaders in their own right, but it is too early to claim victory. These countries must do more to connect to the rest of the global economy and find the technologies that work best for them.

Problems

Use the Rule of 72 to estimate how long it will take for India, Spain, and South Africa to double their standards of living.

Using the research skills you have acquired, retrieve the following data from The World Bank database (http://databank.worldbank.org/data/home.aspx) for India, Spain, and South Africa for 2008–2013, if available:

  • Telephone lines
  • Mobile cellular subscriptions
  • Secure Internet servers (per one million people)
  • Electricity production (kWh)

Prepare a chart that compares these three countries. Describe the key differences between the countries.

References

“Shinzo Abe’s Government Looks Likely to Disappoint on Fiscal Consolidation.” The Economist , May 4, 2013. http://www.economist.com/news/finance-and-economics/21577080-shinzo-abes-government-looks-likely-disappoint-fiscal-consolidation-dont.

Banerjee, Abhijit V., and Esther Duflo. Poor Economics . “About the Book: Overview.” http://pooreconomics.com/about-book.

CARE International. “About Us.” Accessed January 14, 2014. http://www.care-international.org/about-us.aspx.

Central Intelligence Agency. “The World Factbook: Africa, Burundi.” Last modified November 12, 2013. https://www.cia.gov/library/publications/the-world-factbook/geos/by.html.

Central Intelligence Agency. “The World Factbook: Africa, Democratic Republic of the Congo.” Last modified November 12, 2013. https://www.cia.gov/library/publications/the-world-factbook/geos/cg.html.

Easterly, William. The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good . Penguin Group (USA), 2006.

Goel, Vindu. “Facebook Leads an Effort to Lower Barriers to Internet Access,” The New York Times. Last modified August 20, 2013.

Google. “Project Loon.” http://www.google.com/loon/.

GOV.UK. “Department for International Development.” https://www.gov.uk/government/organisations/department-for-international-development.

The World Bank. “Millennium Development Goals.” http://www.worldbank.org/mdgs/.

Todaro, Michael P., and Stephen C Smith. Economic Development (11 th Edition) . Boston, MA: Addison-Wesley: Pearson, 2011, chap. 3.

Vercillo, Siera. “The Failures of Canadian Foreign Aid: Tied, Mismanaged and Uncoordinated.” The Attaché Journal of International Affairs . (2010). http://theattachejia.files.wordpress.com/2013/10/the-attache-2010-issue.pdf.

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Source:  OpenStax, Principles of macroeconomics. OpenStax CNX. Jan 09, 2015 Download for free at http://legacy.cnx.org/content/col11750/1.2
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