IB Economics HL 4.8.4 Evaluating development measures Question Bank

Study the extract and data below and answer the questions that follow.
Rwanda

(1) 20 years after the 1994 genocide* that claimed the lives of 800000 people, international views about Rwanda are mixed. On one hand, there is admiration for the country's dramatic development progress and economic success, while on the other, there is criticism of political repression. Human rights activists maintain that Rwanda too often suppresses political opposition and free speech.

(2) Development indicators show significant changes in education, public health and the economy. Rwanda spends huge proportions of its national budget on health and education. In 2011, almost 24 % of total government expenditure went to health and 17 % to education. Child and infant mortality rates have fallen dramatically. Life expectancy has risen from 48 years in 2000 to more than 64 years in 2012. Significant progress has been made in terms of the Millennium Development Goals.

(3) The economy has grown at an average of nearly 8 % per year from 2010 to 2014 because of increased agricultural productivity, tourism and government spending on infrastructure and housing.

(4) However, extreme poverty remains a reality for more than 60 % of the population. Poverty has fallen, but an estimated 63 % of Rwandans continue to live on less than the equivalent of US $\$ 1.25$ a day and 82 % on less than US $\$ 2$ a day. In 1985, the Gini coefficient was 0.28 . It climbed to a peak of 0.53 in 2005 and in 2010 stood at 0.51 . In spite of major achievements, the prime minister noted that "Poverty and inequality remain serious challenges. The growing youth population means that we need to create 200000 jobs every year".
5 Rwanda is heavily dependent on official development assistance (ODA). This was cut in 2012 after a United Nations report accused the Rwandan government of supporting a rebellion in the neighbouring Democratic Republic of Congo. Although aid resumed in 2013, the cutback severely limited the government's budget. The World Bank reported that the temporary cut in aid could still "threaten the economic outlook for Rwanda".

(6) The government is starting a programme of privatization and liberalization with the goal of attaining rapid and sustainable economic growth and reducing poverty. The aim is to transform the economy from its 90 % dependence on subsistence agriculture into a modern, broadly based economic engine, welcoming investors and creating employment and new opportunities. Rwanda's recent entry into the East African Community (a customs union comprising Burundi, Kenya, Tanzania and Uganda) should further improve its economic potential. www.nytimes.com, 23 March 2014 and www.afdb.org, accessed 29 September 2014]
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* genocide: the deliberate killing of a very large group of people from a particular ethnic group or nation.
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Using data from Figure 1 with reference to Rwanda and Nigeria, explain why higher gross national income (GNI) per capita might not lead to higher economic development.