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Domestic Factors & Economic Development, Income Distribution, Domestic…
Domestic Factors & Economic Development
Education
Increase efficiency in workforce
'Changing attitude' is important for development
People are able to read and communicate effectively, to open rooms for discussion and negotiation
Improve levels of health
Improve women's role in society
Health
improved health car, improved life expectancy
trained doctors and nurses, building of hospitals and clinics, provision of public health services, access to safe water and immunization
higher GDP spending on healthcare, tend to have higher life expectancy
Political Stability and Lack of Corruption
A stable politic will attract FDI
Gov. planning, structures and laws are more organized and enforceable which will lead to higher living standard
"Corruption": dishonest exploitation of power for personal gain
Gov. are not accountable
Official accounting practices are not well formulated
Lack of freedom of speech
e.g. bribery, extortion, fraud, patronage, influence peddling, nepotism
reduces trust
hinder economic growth
Infrastructure
"the essential facilities and services that are necessary for economic activity"
allows reaching potential buyers, wider communities, advance household activities
transportation, public utilities, public services, communication services
Income Distribution
gap between the well-off and the bad-off are significant in developing countries
Low level of savings, low investments, low growth rate
rich tend to dominate politics and economy
the rich creates capital flight
Inequality in income distribution
Domestic Factors & Economic Development
Taxation
tax revenue gained by gov. used to finance public services and infrastructure
Drawbacks in (mostly) developing countries:
tax exemption and corruption in admin.
corporate tax revenue tend to be low since there is relatively little corporate activity
main source: export, import and excise duties, which is only benefit if a country involved heavily in the foreign trade
over size of informal markets
Financial system, Credit and Micro-finance
both developed and independent financial institutions are essentials
"Financial system" : institutions where lending and borrowing is carried out
"Micro-finance" : provision of financial services such as small loans
"Micro-credit" : provision of small loans to individuals who have no access to traditional sources
financial services are important for managing assets, savings, investment
Legal System
enforce contracts and property rights
allow people to own and benefit from private property
Importance of 'basket' of legal rights @ property rights
Use of Appropriate Technology
"tech. that is appropriate to use with existing factors endowments"
Production: giving workers capital equipment to use that is cheap to make and requires labour for its use (e.g Universal nut sheller)
Consumption: very cheap to purchase, requires source that is abundant everywhere, does not affect the environment, free up time (e.g solar cooker)
Empowerment of women
Improving welfare of women improved their social standing
Well being of families refined
Education of children ameliorates
Quality of workforce boosted