Economic development

Economic development

A process where a nation improves the economic, political and social well-being (i.e. the general health and happiness) of its people/citizens

Economic growth

When an economy has increased its ability to produce more things, such as goods and services.

How can economic development occur?

• Discovering natural resources (e.g oil, minerals)

  • Increase in exports, attract foreign investment, new industries and job creation

• Improving infrastructure (e.g factories, machinery, roads, railways, or ports)

  • More productivity = reliable power grids enhance efficiency of businesses/industries (more in less time)

  • Especially transportation, reduces time + cost = facilitates trade, higher profits for businesses.

• Using technology to improve productivity

  • Automation = more and better quality product = higher GDP

  • Increased efficiency, allowing businesses to produce more with same resources.

• Teaching new skills to workforce using better education and training

  • Creativity and innovation develop new products and technology

  • Skilled workforce can adapt to new technologies = increase efficiency + productivity

  • Attracting investment, creating more jobs

• Introducing rules and laws to regulate how businesses work

  • Trade agreements

    • lowers trade barriers like tariffs, quotas = easier + cheaper to export/import

    • Provide stable trading environment = promote trade

  • Create a safer space to make deals

Case study: Qatar

Why has Qatar experienced such rapid economic growth since the 1970s? What was Qatar before relying on?

In 1971 Qatar discovered significant natural gas reserves in 1971 which contribute largely to their GNI. Thanks to this, it has rapidly developed from a small fishing nation (poorest nations) into a wealthy nation with a bustling commercial centre.

Qatar is a high scoring HDI country with 0.875.

How does trade promote economic growth?

• Expands markets: increased demand as trade allows businesses to sell to a wider audience.

• Trade exposes domestic businesses to international competition g forcing them to improve efficiency, innovate, reduce costs to remain competitive.

• Can attract foreign investment which can boost economic activity and create jobs.

• Trade facilitates the transfer of technology and knowledge

How is economic development measured? Why is important that economic development helps everyone?

Using the Human Development Index (aparece en politics and governance)

Because it would create disparities which would lead to inequalities in a population

• Unequal access to healthcare = reduced quality of life

  • could for example (there may be more situations) more sick → less time spent in school → lower level of educational attainment → less chance to be hired in a higher wage job

  • stress/more sick → missed workdays → more chance of getting fired/replaced/ bc of poor/less quality work

• Unequal access to education → perpetuate cycles of poverty = struggle to access higher education/lower levels of educational attainment → limit career options and earning potential + susceptible to unemployment during economic downturns.

  • Loss of talent and potential

  • When a significant portion of population lacks access, it can limit overall economic growth and development.

Why is economic development not always a good thing?

• Environmental degradation

  • Often involves increased industrial activity → pollution of air (greenhouse gases like CO2, sulfates), water and soil.

    • Contribute to global warming

    • Loss of biodiversity

  • Resource depletion: deforestation, overfishing and depletion of minerals

  • Unsustainable practices: may be prioritising economic gains over environmental sustainability, harming future generations.

• May displace communities: construction of development projects (e.g dams or mining operations) often destroy their homes.

  • In China the construction of a huge hydroelectric dam (Three Georges Dam) to generate power lead to the relocation of over 1 million people since the land was submerged.

• Uneven displacement of population: migration towards urban centers = pressure on resources, social services (e,g schools too many children affects quality of education as teachers spend less time on a child), houses, etc

• Inequality

  • Sometimes it does not always benefit everyone equally. It can exacerbate existing inequalities or create new ones → social unrest (people are unhappy) may lead to violent public disturbances/strikes = instability

Does economic development benefit everyone in a population? Pros and cons

Pros:

• Creates jobs = reduces unemployment and poverty → improves living standards by increasing income (can buy better housing, afford leisure activities, better healthcare and education)

• Improves public services = economic growth (which usually leads to economic development) generates high tax revenues, allowing governments to invest in more public services, like healthcare, education and infrastructure (safer, efficient)

Cons

• Can widen income inequality it wealth is concentrated in the hands of the elite, leaving lower income groups behind

• Likely, that in rule areas, minorities or indigenous people may not receive equal access to these benefits

  • most of the development focuses on urban areas so people in the countryside/indigenous may not receive same benefits

    • Also affects population distribution. Many will migrate to urban centres → pressure on resources, social services and infrastructure + maybe environmental damage (deforestation to build more houses, more pollution as more cars, etc)

    • Many Europe countries: like Spain. Densely populated in middle and coastal areas.

For this topic we need to go back to “Human Development Index”