Evaluate the possible factors influencing the level of economic development in a developing country of your choice

Edexcel A-Level Economics 25 Mark Essay Plan

In Sudan, public services such as healthcare are struggling to keep running. Power outages, blocking of internet access, and fuel shortages, will mean hospitals struggle to operate. Many of the hospitals in the capital city, Khartoum, have reported shortages of doctors, blood, transfusion equipment, medical supplies, and other skilled workers and commodities. Evaluate the possible factors influencing the level of economic development in a developing country of your choice. (June 2025)

Paragraph 1

• Argument: primary product dependency 
• Diagram: 
• Evaluation: comparative advantage

Paragraph 2

• Argument: savings gap
• Diagram: 
• Evaluation: microfinance

One factor that has enabled Vietnam to develop is that they have reduced their economy’s dependence on primary products. Primary product dependency is damaging for two reasons. First, their prices are volatile since they have inelastic demand and fluctuating supply. This means any changes in the factors of supply, such as the weather, or the number of firms, can suddenly change the price. This means that farmers’ incomes can suddenly change, which makes it harder for them to increase their living standards. Fluctuating incomes makes planning difficult and they may find it difficult to invest enough into their family’s health and education, with things like vaccines, mosquito nets, textbooks and school uniforms, that are vital to development. 

The second reason primary product dependency is damaging is illustrated by the Prebisch-Singer hypothesis which explains that, since primary goods are income inelastic in demand, demand for them remains constant whilst incomes around the world rise. Comparatively, demand for manufactured goods increase. This means that agricultural goods have relatively lower prices over time, which means that farmers’ incomes remain low whilst incomes increase in the secondary and tertiary sector. This is something that Vietnam has been able to achieve through the promotion of FDI. By forming free trade agreements and investing in infrastructure, they have attracted investment from MNCs. They are now Apple’s largest production base in Asia. 

However, producing and exporting primary products can be a hugely beneficial way to promote development as long as there isn’t an over-dependence. For example, Vietnam is the world’s second largest exporter of coffee. If a country has a comparative advantage in a certain primary product, it can allow the country to be more competitive due to a lower opportunity cost of producing the food or service. This can lead to an increase in exports leading to economic growth. As a country develops, infrastructure, health and education would improve over time due to greater tax revenues and greater government spending, allowing for more diversification. 

Another factor that influences the development of countries like Vietnam is the savings gap. The Harrod Domar model explains that, in countries with lower savings, banks are unable to lend. This means that firms are unable to fund investment, so capital stock cannot increase. This then means that the trend rate of economic growth cannot increase, which means that real gdp remains low. Although economic growth alone does not guarantee economic development, it is essential because without growth, people do not have incomes to improve health, education and living standards. Also, governments cannot generate consistent levels of tax revenue needed for investment. In the case of Vietnam, they were able to life 40,000,000 people out of poverty in the 20 years leading up to 2014, allowing them to invest in infrastructure and enable long-term growth. Vietnam aims for 30% of adults to have savings accounts by 2030.

However, savings are difficult in developing economies unless incomes are high enough first. Arguably the most important factor that enables saving is citizens having stable, well-paid jobs, and this is unlikely unless the government promote foreign direct investment and attract multinational corporations who can create jobs in the secondary sector. Alternatively the government of a developing country can implement protectionism, making foreign goods more expensive and allowing domestic firms to benefit from economies of scale. This is something Brazil have done well. 

This leads me to conclude that, in my opinion, reducing primary product dependency is the biggest factor that can promote economic development, however there are different strategies that can be used to achieve this, such as promotion of FDI, or increasing protectionism and supporting domestic businesses. 

A-Level Economics Tutoring

I offer one-to-one and small group A-Level Economics tutoring for students across the UK and internationally. With 87+ five-star Google reviews and tutoring experience since 2017, I specialise in helping students understand difficult concepts and improve their exam technique.