Domestic Factors and Development
Institutional Factors: Factors within a country that lead to development
1) *Education
Pros:
- Productivity rises
- More education = more Jobs, Incomes rise = social and economic
choice rises (leisure time/choice of luxury products)
- Gender Equality
- Health - Education on HIV/Malaria/Smoking - Increase Health
- Technology - Higher skills - More tertiary sectors jobs - Increased r
and d.
Cons:
1) Funding
Expensive to make Education Inclusive from government
Private sector charges prices - unfair on lower incomes - more income
inequality
2) Underlying Problems
Children seen as workers in developing countries
To work on farms
Limits benefits of education/development
2) *Healthcare
Pros:
- Productivity rise s- Healtehr people = more productive
- More jobs created - If more hospitals/dentistry clinics.
- Standards of living rises - happiness rises
- Sanitation and drinking water - easily available
Cons:
1) Funding
Costs a lot of money for the government to fund.
2) Price
If private sector funds - people pay for treatments - increased income
inequality and inequality in general.
, 3) *Infrastructure - Roads/schools/hospitals/bridges/ports etc
(Things that exist for economic activity to take place properly0
Pros:
- Easier access to markets
Firms can transport their products at lower costs
Consumers can access markets and purchase goods/services at lower
prices.
Increased International competitiveness.
- Access to school/hospital
People who are disabled can now aces school/hospital
- FDI
Attract FDI - firms think that country with goods infrastructure = lower costs
of production
Leads to higher development
Cons:
1) Funding - Cost a lot
Necessary for development - but very expensive to government
4) Taxation
Pros:
- Fiscal Dividend
Can be spent on: Education/health/infrastructure
Cons:
1) Corruption
Government doesn't spend money efficiently - keep money in their open
pockets.
Tax reductions given to firms or people who don't deserve them
Because politicians are friends with them.
2) Low corporate Activity and tax incentives
Corporation tax increases = low increase in taxation = lower fiscal dividend.
MNC’s get tax incentives to operate in the country.
3) Informal Markets
Lots of informal markets in developing countries - limits tax collection
4) Role of WTO
Falling tariffs due to WTO
Institutional Factors: Factors within a country that lead to development
1) *Education
Pros:
- Productivity rises
- More education = more Jobs, Incomes rise = social and economic
choice rises (leisure time/choice of luxury products)
- Gender Equality
- Health - Education on HIV/Malaria/Smoking - Increase Health
- Technology - Higher skills - More tertiary sectors jobs - Increased r
and d.
Cons:
1) Funding
Expensive to make Education Inclusive from government
Private sector charges prices - unfair on lower incomes - more income
inequality
2) Underlying Problems
Children seen as workers in developing countries
To work on farms
Limits benefits of education/development
2) *Healthcare
Pros:
- Productivity rise s- Healtehr people = more productive
- More jobs created - If more hospitals/dentistry clinics.
- Standards of living rises - happiness rises
- Sanitation and drinking water - easily available
Cons:
1) Funding
Costs a lot of money for the government to fund.
2) Price
If private sector funds - people pay for treatments - increased income
inequality and inequality in general.
, 3) *Infrastructure - Roads/schools/hospitals/bridges/ports etc
(Things that exist for economic activity to take place properly0
Pros:
- Easier access to markets
Firms can transport their products at lower costs
Consumers can access markets and purchase goods/services at lower
prices.
Increased International competitiveness.
- Access to school/hospital
People who are disabled can now aces school/hospital
- FDI
Attract FDI - firms think that country with goods infrastructure = lower costs
of production
Leads to higher development
Cons:
1) Funding - Cost a lot
Necessary for development - but very expensive to government
4) Taxation
Pros:
- Fiscal Dividend
Can be spent on: Education/health/infrastructure
Cons:
1) Corruption
Government doesn't spend money efficiently - keep money in their open
pockets.
Tax reductions given to firms or people who don't deserve them
Because politicians are friends with them.
2) Low corporate Activity and tax incentives
Corporation tax increases = low increase in taxation = lower fiscal dividend.
MNC’s get tax incentives to operate in the country.
3) Informal Markets
Lots of informal markets in developing countries - limits tax collection
4) Role of WTO
Falling tariffs due to WTO
