Cambridge International as and a level Economics Ebook

Progress and development: 
Assessing changes in living 
standards over time and between countries involves 
distinguishing between economic growth and economic 
development. The concepts of progress and development 
are useful here.
KEY CONCEPT LINK
Comparison of GDP per head between 
countries
Th
e citizens of a country with a higher GDP per head are 
likely to enjoy higher living standards than people living 
in a country with a lower real GDP per head, but this is not 
necessarily the case.
To compare living standards between countries, 
it is necessary to convert the real GDP per capita 
into a common currency. To avoid the comparison 
0
Consumer goods (millions)
Capital goods (millions)
5
6 6.8
4
5.2
5.9
Figure 9.7 
The eff ect of producing more capital goods in the 
short and long run
SELF-ASSESSMENT TASK 
9.6
Not all benefitting from Asia’s fast growth
Recently a number of Asian economies have experienced 
rapid economic growth and this has led to a fall in 
absolute poverty. The main beneficiaries, however, 
have been the rich. Income inequality has increased, 
particularly in China, India and Indonesia. In these 
three counties spending on education in 2013 was less 
than 4% of GDP, compared with an average of 5.2% in 
developed economies.
To ensure that economic growth provides the greatest 
benefits for the greatest number of people, some 
economists suggest that a fair and stable tax base 
has to be developed in a number of Asian economies, 
which would increase the ability of the governments to 
spread the benefits of economic growth.
Read the feature below and then answer the questions that follow.
1
Why may the rich benefi t most from economic 
growth?