Download Economic Development and Regeneration

Economic Development and
Regeneration
Learning outcomes
 By studying this section students will be able to:
define and explain economic growth
review critically the concept of economic growth
understand the determinants of economic growth
evaluate appropriate growth strategies for developed and developing
countries
 evaluate the role of the sector in regeneration strategies
 evaluate the contribution of the sector to growth




Meaning and measurement of economic
growth
 Economic growth is defined as the increase in real output per
capita of a country.
 The most commonly used measures of output are GDP and GNP.
Problems of measurement
 First there are the problems associated with collecting national




income data.
Second some apparent changes in growth may in fact stem from
currency movements against the dollar.
Third, over a period of time the labour force may work fewer
hours in a week.
Fourth, GNP per capita figures are an average. They may disguise
the fact that there are large differences in incomes of the
population.
Finally, economic activity which contributes to GNP has some
unwanted side-effects in the form of pollution.
The causes of economic growth
 Land Utilization
 Labour
 It is the quality of the labour force that is important in increasing
productivity
 Capital
 Investment in new plant, machines and other capital enables
labour productivity and GNP to rise.
 Technology
 Improved technology can increase growth by reducing production
costs and creating new products for the market.
Promoting growth
 Interventionists believe the government should play a key role in
funding appropriate education and training, R&D and investing in
projects and infrastructure.
 Free marketeers advocate market liberalization and ‘supply side’
policies, e.g:







reducing government expenditure to release resources for the private sector
reducing taxes to increase incentives
reducing trade union power to encourage flexible labour markets
reducing welfare payments to encourage individual enterprise
encouraging risk and entrepreneurship and privatisation
encouraging competition through deregulation
reducing red tape
Economic growth in developing countries
 Stages of development
 Advanced Economies
 Countries in Transition
 Developing Countries
Advanced Economies
 The term developed country is
used to describe countries that
have a high level of development
according to some criteria.
 One such criterion is income per
capita and countries with high
gross domestic product (GDP) per
capita being described as developed
countries. Another economic
criterion is industrialization.
Countries in Transition
 A transition economy or transitional economy is an
economy which is changing from a centrally planned economy to
a free market. Transition economies undergo economic
liberalization (letting market forces set prices and lowering trade
barriers), macroeconomic stabilization where immediate high
inflation is brought under control, and restructuring and
privatization in order to create a financial sector and move from
public to private ownership of resources.
 These changes often may lead to increased inequality of incomes
and wealth, dramatic inflation and a fall of GDP.
Countries in Transition
 Transition process is usually characterized by the changing and
creating of institutions, particularly private enterprises; changes
in the role of the state, thereby, the creation of fundamentally
different governmental institutions and the promotion of privateowned enterprises, markets and independent financial
institutions.
 E.g. Albania, Armenia, Azerbaijan, Belarus, Bulgaria, Cambodia,
China, Croatia,
Developing Countries
 A developing country is a country that has low standards
of democratic governments, civil service, industrialization,
social programs, and/or human rights guarantees that are yet
to "develop" to those met in the West or alternative goals of
material progress (not necessarily a clone of those of the
West).
 It is often a term used to describe a nation with a low level of
material well being.
 Despite this definition, the levels of development may vary,
with some developing countries having higher average
standards of living.
Developing Countries
 Developing countries are in general countries which have not
achieved a significant degree of industrialization relative to
their populations, and which have, in most cases a medium to
low standard of living. There is a strong correlation between
low income and high population growth.
 The development of a country is measured with statistical
indexes such as income per capita (per person) (GDP), life
expectancy, the rate of literacy, et cetera.
 The UN has developed the HDI, a compound indicator of the
above statistics, to gauge the level of human development for
countries where data is available.
Human Development Index
 The Human Development Index (HDI) combines normalized
measures of life expectancy, literacy, educational attainment,
and GDP per capita for countries worldwide. It is claimed as
a standard means of measuring human development—a
concept that, according to the United Nations Development
Program (UNDP), refers to the process of widening the
options of persons, giving them greater opportunities for
education, health care, income, employment, etc.
Human Development Index
Advanced and Emerging Countries
Level of Incomes and Countries
Newly Industrialized Countries
Barriers to Growth
 high population growth
 existence of a large subsistence sector:
 low incomes: This leads to low savings,
leading to low investment, leading to
low incomes (low rate of capital
formation)
 an undeveloped financial sector.
 absence of welfare system: This can
lead to over population where children
are seen as a financial insurance for old
age
 low levels of training and education:







This can mean that taxation is difficult.
few resources
dependence on raw material exports
employment centred on the
agricultural sector of economy
traditional (non-entrepreneurial)
culture
foreign currency shortages
poor terms of trade (exports cheap,
imports expensive)
international debt
Strategies for development
 import substitution (producing goods that are currently
imported)
 export-led growth (producing goods and services where a
local cost or other advantage can be established) – leisure
and tourism can be important elements in this strategy
 population control
 education and training projects
 infrastructure projects
Regeneration
 Regeneration is the term used to describe the process of
economic redevelopment generally in an area that has
suffered decline because of structural changes in the
economy.
 Urban Regeneration
 Rural Regeneration
Urban Regeneration
 Urban renewal (similar to urban regeneration in
British English) is a program of land re-development in areas
of moderate to high density urban land use.
 The process has had a major impact on many urban
landscapes, and has played an important role in the history
and demographics of cities around the world, including:
Beijing, China, Melbourne, Victoria; Glasgow, Scotland;
Boston, Massachusetts; and San Francisco, California
Rural Regeneration
 A re-development program aims to support
rural areas in terms of farming,
reforestation, improve employment or selfemployment in the areas.
 For tourism areas, such as agro-tourism,
ecotourism.
Rural regeneration
 Rural Diversification in
Finland: A farmer provides
boat trips for tourists.
 Thailand: Local people
offers home-stay tourism
for travellers.
The End