Domestic factors and economic develpment

Domestic factors and economic develpment

Introduction	Domestic factors that may act as sources of economic development and if absent are barriers to development Institutions are "the structures that humans impose on human interaction and therefore define the incentives that determine the choices that individuals make that shape the performance of societies and economies over time"
Education	Improve well being of population Both the educated and the society leads to - more effecient workers -better able to read and comunicate-> the ability to debate Benifits- 1. improve the role of women in society -> better live birth rates 2. improve levels of health ->improved education levels ->literacy rates -> improved levels of health Millennium goal is to ensure children everywhere will be able to complete an elementary school education Efforts have been made but things are also insufficient some places because -child labour -insufficient funding
Health care	Will improve general level of economic development Storngest correlation between life expacenacy and healthcare Countries with more of their gdp going to health care have higher life expectancies Correlation between life expectancy and education
infrastucture	The essential facilities and services such as roads , railways, telphone, and other utilites which are necessary for economic activity Lead to- -> children can get easier to school ->telephone makes it easier to communicate etc. ->gas and electricity makes it possible to cook and treat food Types of infrastructure Transport- Roads Railways Seaports Airports Public utilities-electricity Gas Water supply Public services-police service Fire service Education Communication services- postal syestm Radio and television
Political stability and lack of corruption	Countries that are politcaly stable are more likely to recieve FDI and aid Polit stability leads to- -> input in running the country Polit instability leads to -> uncertainty and economic break down ->low level of living low incomes ->lower economic growth Corruption- Defined as dishonest explotation of power for personal gain Prevalent where- 1. govs are not accountable for their people 2. govs spend large amount of money on large scale capital investmand projects 3. official accounting practices are not well formulated or controlled 4. gov officials are not well payed 5. political elections are not well controlled 6. legal structures are weak 7. freedom of speech is lacking Types of corruption 1. eloectoral corruption- wishes of the people are not heeded 2. legal issues- people can buy their way out of trouble 3. unfair allocation of resources- contracts go to the highest bidder and then there is market failure 4.bribes. Bribes increase the costs of business 5. trust- hard to get forign investment 6.contracts are not honored- 7. diveting money away from education to others 8. regulations- officials turn a blind eye on regulations 9. capital flight 10. reduces the wellbeing of the common citizen  because of bribes
Legal systems	Property rights- Right to own assets Right to use assets Right to benfit from assets Right to sell assets Right to exclude others If people cant do these there is no incentive to make investmants and growth
Financial systems and credit	Saving leads to unvestmant- can be hard without proper institutuions People tend to buy assets when they dont have it like cows Micro loans- Microcredit is the extension of very small loans (microloans) to impoverished borrowers who typically lack collateral, steady employment and a verifiable credit history. It is designed not only to support entrepreneurship and alleviate poverty, but also in many cases to empower women and uplift entire communities by extension. In many communities worldwide, in developed and developing nations alike, women lack the highly stable employment histories that traditional lenders tend to require.
Taxation	Tax revenue provide govs with means to finance things Difficult to get taxes when the inefficency and corruptions Some times 3% Low corp tax Size of informal market Dont pay ta
Use of appropriate tech	Surplus of labour so they use hiigh input high labour things like nut sheller For consumption they use the solar cooker so it frees up time and saves the enviroment by not useing trees
The empowerment of wmen	Causes- -> well being of family is improved -> education improves -> quality of workeforce improves -> women earn more ->more control over their sexuial health thus less kids
Income distribution	High in developing countries Causes- Low level of savings Low investmant and low growth Rich tend to dominate politics and economy Pro poor growth for benifit of the man]