Factors Of Economic Development
Economic development involves actions that are sustained and concerted by policy makers and the entire community. These actions lead to improved standards of living as well as the economic health within a specified area either in the local, regional or global environment. Economic development can also be termed as the qualitative and quantitative changes that occur within an economy. For economic development to take place there has to be contributions by various factors. Some these factors can lead to economic development if they are appropriately managed (Mohr, 2012). There is a lot of interest in macroeconomics when it comes to these factors of economic development. Macroeconomics deals with performance, behavior, structure and the entire decision making of an economy in general as opposed to looking at individual markets. This encompasses national, regional as well as the global economies. Through microeconomic there is the aggregation of indicators like GDP, price indexes and the rates of unemployment that enable the understanding of the functioning of the entire economy. This paper will look at various factors of economic development and how they contribute to economic development.
The system of government that is found within a country is a major determinant of the economic development that can take place within the country. This is because; most of the industries in a country are under the control of the government in one way or another. There are government agencies that usually maintain the standards of operations within the industries. The government also has the duty to approve of investments that are being made in the country. These investments are what bring about economic development within the country since they will be made in different sectors of the economy. Therefore, it is important for good governments to be in place which will encourage and allow investments in different sectors of the economy .this particularly the sectors that have a potential when it comes to economic development. There are policies that government set that favor businesses such as tax incentives, and encouraging of a business culture which can lead to economic development. Without a good government that allows investment and sets policies that can lead to economic development then a country can not realize economic development (Wijeya Newspapers Ltd ,2010).
Market economy is an economy where decisions that pertain to investment, production are made on the basis of supply and demand. The market economy is characterized by making decisions pertaining investment as well as the allocation of the producer goods through markets. The market economy is an important factor when it comes to economic development of a country. This is because; there can be creation of market economies that support economic development. This is such as the creation in demand of products from particular sectors of economies which will lead to increase in investment in such sectors and hence economic development in the sectors (Mohr, 2012).
People are very important when it comes to the economic development within a country. This is because; human capital is needed in virtually all sectors of the economy. Without the contribution of people in the production process, manufacturing, marketing and other areas of production then economic development can not be realized. Therefore to ensure that people give their all towards economic development their interests should be looked into. Otherwise if not treated well then people will not work hard towards the development of the economy within the country.
Property rights have to be safeguarded in all ways possible. There are some inventions that are made in particular sectors of the economy. These inventions can lead to economic development and hence the rights to these inventions should be protected. This protection will ensure that it the country from which the inventions were made that enjoys its benefits. If these rights are not protected other malicious people can use them for their own gain which will not be helpful to the country. Therefore, for economic development to be encouraged there should be safeguarding of property rights.
Integrity is a very important factor of economic development that has to start from the government down to the other players in the different sectors of the economy. Integrity requires that there is accountability and transparency within the different sectors of the economy. Transparency means that the decisions that are taken should be enforced in a manner that is open which allows strict following of rules s and regulations. This is only realized if information is given freely and is accessible for the people who are affected by the decisions. Accountability is only enforced if there is transparency as well as the existence of the rule of law (Tromp,2010).If there is no transparency there will be corruption which can really have an impact on economic development. If corruption exists then only specific people gain as opposed to the entire nation hence there cannot be economic development. Economic development can only be realized if there is integrity and hence it should be encouraged in all sectors.
The geographical location of a country is very important when it comes to the economic development. There are countries that are located in areas where here is oil, gas, useful minerals and so on. The geography of such countries influence the economic development since these resources are going to be tapped and made useful for the country (Bloch, & Tang, 2011).
Openness to trade
If a country is open to trade it means that it can trade with other countries freely. The country can export what they have in surplus and also gain what they do not produce. If their exports are more than their imports then the country will be at an advantage and hence their economy will develop. It is therefore very important for a country to be open to trade with other countries since it leads to economic development (Bloch, & Tang, 2011).
Strong investment ratio
A strong investment ration is very important to economic development. Strong investment ration means that a lot of investments are being made within the country. This leads to the expansion in various sectors of the economy that can eventually lead to economic development.
All these factors are important for a country to undergo economic development. They have a crucial role to play in economic development hand hence they should be safe guarded. Without these factors no economic development can be realized.
Bloch, H. & Tang, S. (2011). Deep determinants of economic growth: institutions, geography and openness to trade. Retrieved May 2, 2013 from
Mohr, A. (2012). Factors Affecting Economic Development and Growth. Retrieved May 2, 2013 from http://smallbusiness.chron.com/factors-affecting-economic-development-growth-1517.htmlTromp, E. D. (2010).The importance of integrity for the development of a country. Retrieved May 2, 2013 from http://www.bis.org/review/r101209c.pdf?frames=0Wijeya Newspapers Ltd. (2010).Good governance and economic development. Retrieved May 2, 2013 from http://www.sundaytimes.lk/100110/Columns/eco.html