5.2 DRC Consequences of Growth

5.2 Consequenses of Growth

-Higher incomes

-Improved economics indicators of welfare e.g. HDI

-Higher Government revenues

-Greater inequality

-Negative externalities and lack of sustainability

Inequality of income – growth rarely delivers its benefits evenly. It often rewards the strong, but gives little to the economically weak. This will widen the income distribution in the economy. In developing economies income distribution can already tend to be unequal and many of the benefits of growth may go to the better-off in society and flow overseas as increased profit for multinational corporations.

Pollution (and other negative externalities) – the drive for increased output tends to put more and more pressure on the environment and the result will often be increased pollution. This may be water or air pollution, but growth also creates significantly increased noise pollution. Deforestation and environmental degradation are likely to result from growth. This is particularly true in developing countries as they tend to have little legal protection of the environment.

Loss of non-renewable resources – the more we want to produce, the more resources we need to do that. The faster we use these resources, the less time they will last.

Loss of land – increased output puts further pressure on the available land. This may gradually erode the available countryside. In many developing economies there will also be additional problems resulting from the movement of people from country to urban areas.

Lifestyle changes – the push for growth has in many areas put a great deal of pressure on individuals. This may have costs in terms of family and community life in many economies.

Add a comment January 27, 2010

5.1 International Development and DRC

International Development

Democratic Republic of the Congo

GDP:$20.76 billion (2008 est.)

GDP per Capita: $300 (2008 est.)

Labour Force: 23.53 million (2007 est.)

Classification of Countries

Developed Country

Developing Country

Less Developed Country (LDC)

More Developed Country (MDC)

What does economic growth mean?

-Economic growth refers to an increase in a country’s total output of goods and services. It is measured by changes in real GDP (i.e. the increase in GDP after inflation has been removed).

-Development is an increase in the ability of a country to produce goods and services thereby offering the opportunity for a higher material standard of living.

-Development is not the same as economic growth as development is an increase in the potential for an economy to grow, not growth.

What affect growth?

Natural Factors

The natural factors consist of a countrys endowments in natural resources-land-such as minerals, forests, arable land for agriculture, plant and animal diversity.

ie. Arable land, forests, plentiful water etc.

= country’s ability to satisfy its citizen’s needs and wants.

They are vital in economic growth and development, but they do not explain the whole story.

Agriculture:

coffee, sugar, palm oil, rubber, tea, quinine, cassava (tapioca), palm oil, bananas, root crops, corn, fruits; wood products

Industry:

mining (diamonds, gold, copper, cobalt, coltan, zinc), mineral processing, consumer products (including textiles, footwear, cigarettes, processed foods and beverages), cement, commercial ship repair

A large aspect of the industry comes from natural endowments.

Main Exports: diamonds, gold, copper, cobalt, wood products, crude oil, coffee

Human Factors

Human resources-labour- compromises the skills, knowledge, experience, education, and health of the population wich makes up the labour pool. Investments in these areas, often called social inveestment, increases human capital.

Growth of human resources can be defined as more and or better labourers. (Shifts the PPF outwards)

The increase in the quality of human resources- quality of the working population (Human capital) is the result of knowledge, skills, education and training. Also results from health care, as this adds to the productive capabilities in a country. Investments in human growth goes far beyond economic growth. It has economic benefits and social benefits.

Infant mortality rate:

total: 81.21 deaths/1,000 live births

Life Expectancy:

54.36 years

HIV Prevalence Rate:

4.2% (2003 est.)

country comparison to the world: 16

1.1 million people living with HIV/ AIDS

6^th in the world in relation to HIV/AIDS deaths ~100,000 people a year.

Education:

Literacy Rate: 67.2%

Since 1998 over 5 million people have died from violence, famine, and disease resulting from the war.

Physical Capital and Technological Factors

An increase in investment means that physical capital has increased. Examples are factories, machinery and roads. The accumulation of capital increases a country’s capital stock.

Institutional Factors

banking and microcredit

Debt:

$10 billion (2007 est.)

Political Stability

Implementation of long term policies, rule of law and the system of power transfer

DRC is slowly recovering from two decades of decline. Conflict that began in August 1998 has dramatically reduced national output and government revenue, increased external debt, and resulted in the deaths of more than 5 million people from violence, famine, and disease. Foreign businesses curtailed operations due to uncertainty about the outcome of the conflict, lack of infrastructure, and the difficult operating environment. Conditions began to improve in late 2002 with the withdrawal of a large portion of the invading foreign troops.

Government reforms may lead to increased government revenues, outside budget assistance, and foreign direct investment, although an uncertain legal framework, corruption, a lack of transparency in government policy are long-term problems.

On top of this, the global recession probably will cut economic growth in 2009 to half its 2008 level.

Man made FOPs are collectively known as physical capital.

Technological factors –method of production- New technology is improved technique in prodcution which increases output per unit of input.

So…

From the data I collected we can see that DRC has issues concerning human resources. The country has an abundance of a lot of different natural endowments, and so it has a lot of potential. However because of the relatively weak resources (health issue, war) it cannot grow.

Add a comment January 17, 2010