Chapter Four

(The "Orange Book")B Block

 

Mr. Gibbs

Increasing Physical InfrastructureWhat is it?

ALL of the things that help a country’s economy – it is the groundwork for economic development

Transportation, Electric Power, Telecommunications, water supply, sewer system

Increasing Physical InfrastructureWhy is it important?

It is REQUIRED for physical capital to operate.Most private sector activities cannot take place if there is inadequate physical infrastructure

This will help the Private Sector do all of that SAVING AND INVESTING we keep hearing about.

Increasing Physical InfrastructureHow do they go about it?

• Repair or build new roads – perhaps one that links a port to a city.

• Modernize ports – dig a channel – buy a crane• Modernize Railways• Build/improve airports• Hydroelectric Power – other electricity sources• Telecommunications – exchange of

informationMUST BE CAREFULLY PLANNED – COSTS need to be LOW – BENEFITS need to be HIGH…both long term and short term.

Increasing Industrial Production what is it?

-Increasing Industrial production is the way to help produce the manufactured goods that people need.-Goods for export provide regular jobs -Reasons for increasing physical production-produce manufactured goods for people - this allows people to live their lives regularly and more comfortably      -produce goods for export-this can increse foreign trade which can can increase imports as well-Provide jobs for the part-time workers and the unempleoyed- this puts all of the required physical and human capital to work as needed   

Increasing Industrial Productionwhy it is important JOB CREATION

•  increases job oppurtunitieso once job oppurtunities open up, people are forced to train

themselves and increase their knowledge(human capital)• increases overall goods  and services produced

o save money by not exporting products that can be produced locally

o sell raw goods to other industries to increase physical capital and lead to saving and investing

• must create manufactured goods that its country needs • produce goods for exports to increase capital and

imports  • Creating factories in the country side eliminates large

amounts of immigration into a city •  Buy equipment that needs multiple people

running it, forcing job creation  

Increasing Industrial ProductionHow they go about doing it?

• Developing Nations must increase their physical capital -  factories, tools, machines, and mills to produce manufactured goods for their own use and to export to other countries

•  They must increase their human capital  - the skills of their workers.  As their workforce skills become better they can increase their production and what they are able to produce  

• They must process farm products into food and start to produce other products they need and can export

• Plants that do not require large amounts of money must be set up for assembling finished products

• They must try to set up the plants in towns and cities as well as in the rural areas in order to create jobs for all its people 

Increasing Agricultural Production(what is it?)

* Increasing agricultural production means the government helps to improve methods of farmers in order to improve upon the amounts of jobs lost. INCREASING AGRICULTURAL PRODUCTION: EXAMPLES: build irrigation  systems, to provide loan to farmers, and to pay farmers a good price for their produce

Increasing Agricultural Production

Why is it Important?

• 2 main reasonso 1. most developing countries do not

produce enough food to feed their people sufficientlyas the population grows, the need for food becomes greater

o 2. increased agricultural production can raise the incomes of poor farmers and provide jobs for unemployed or part-time rural workers.

Increasing Agricultural ProductionHow do we go about it?

•  Build irrigation systemso Regular water supply makes 1 growing season possible

• Provide loans to farmers o So they may buy more seeds and tools to increase

production• Pay farmers a good price for their produce

o  Will be motivated to work harder to produce food for their family and the market

•  Using more land for farmingo  Buying land that was not used for farming before = more

agricultural production•  Make farmers the owners of the land

o "Land reform" is when the government buys land and sells again for a smaller price

o "Land reform" gives farmers incentive to produce more and it increases human capital (skills the farmers need to produce more products)

Increasing Foreign TradeWhat is it?

• Foreign trade involves importing goods a country does not have.

•  • It does this by exporting the ones which are plentiful

in the country.•  • As a developing nation grows it will need to import

physical and human capital in order to mass produce and grow its economy.

Increasing Foreign TradeWhy is it important?

• Increasing foreign trade is important to Economic Developement and the quality of living for a countries inhabitants

• can buy from other countries goods and services that the country cannot produce.

• can sell natural goods to buy scarce goods from other countries.

• can sell popular goods for less popular goods in their country

• a country must import goods that are scarce• as foreign trade develops it will increase and thus

increase economic development

Increasing Foreign TradeHow they go about it?

• They first import things they need• Then they import capital to make processes quicker

o Trucks, bull dozers, etc....• Increase industrial production,  import fuel, machinary, and office equipment•  Spur agricultural production, needs fertilizer, seeds, and irrigation pumps• As development progresses and incomes rise, people want more consumer

goods, many of which must be imported• Increase imports, 1rst must increase exports• 2nd they try to produce more food products and consumer goods they have been

importing• Increase variety of exports by producing manufactured goods • Get over scarcity, company might enter into contract with foreign firm

o Foreign firm would normally provide capital + technical know-how for building + operating factory + transporting + selling finished product

Educating and Training People(What is it?)

1. One of the major tasks of economic development 2. It means people who can read instructions and can keep

written records3. People who are skilled in costruction and people who can

run a business4. Education in many developing countries were set up during

coloniel times to train people to work in the business and government educational systems must be transformed or updated

5. When developing countries invest in education and training, they are investing in their most abundent and valuable resources

6. Developing countries are investing in vocational schools, research institutions, agricultural and business schools

7. Attention to older citizens includes adult literacy class, nutrition, family planning, and health care

8. Developing countries are spending billions of money to educate their people to become more productive

Educating and Training People(Why is it Important)

Educating and training people is impotant becasue if a country is to develop its economy, it must have many people with a basic education and with pratical skills. To be able to develop a country needs more:• typists,plumbers,capeners, electricians, accountants,

engineers, economists, businesses manegers, and a variety of other skilled people.

But unforntuatly many of developing nations have very few of these people because they don't supply the needed education and training needed. Without training people these jobs can not be fullfilled and countrys can not opperate business properly. If businneses can not be ran because people are not getting educated, then many people become farmers, which can cause low imports and exports, and then there is probably a high population growth rate, and capitol is probably scarce making a country basically developing and stuck as a developing nation.  

Educating and Training People    >How• Building more schools

                       ~In rural areas                        ~Slums (especially)                                  *Primary schools mostly • Trying to tighten educational systems

                        ~Building and operating training institutions to produce better and more teachers                         ~Developing new course materials  and new less                 expensive textbooks • Developing country parents are being encouraged to

ecspcially keep their daughters in school

Assisting the Poorest People•  What is it?• Poverty-barely able to fulfill basic needs• Absolute Poverty-Unable to fulfill basic

needs• The government creates more jobs in

order for those in poverty to make more money

• If those in poverty make more money GNP per Capita

• rise in GNP per Capita improves the quality of life of those living in a particular country

Assisting the Poorest People(Why is it Importnt)

It is important to assist the poorest people because: • Economic growth alone doesn't reduce absolute

poverty, the poorest population of people need to be helped out of poverty.

• People cannot meet basic needs even with economic development, and need to be supplied with some things..

• This narrows gap between rich and poor making the country overall more balanced.

• entire country will benefit if there are less people in absolute poverty because more people wll be working and the whole countries economy will improve!

Assisting the Poorest People

• government must focus all of their activities on them.

•  A high percentage of people living in poverty work in agriculture.

•  The government must assist workers in producing more. The government must also create job opportunities

•  (i.e. boatyards, textile mills, and workshops). 

• To improve the quality of the housing of people living in poverty, developing countries are offered better building mateials.

                The Poorest People

 

Slowing Population Growth

Population Growth is that rate at which a population grows.  In Developing Nations it is higher because of the prestige of a big family*, the old habits of having more kids to ensure survival, and the introduction of vaccines and modern medicine. *A big family is a symbol of wealth and success - big families can help at home on the farm or go off and earn money elsewhere.

Slowing Population Growth

Why is it improtant to address?  It is the most important area of economic development to address.  It should be introduced in the first of any 5 year plans.

why?

because any of the other 6 areas of economic development can be countered by a rapidly growing population

Slowing Population Growth

For example:  Take Agricultural Production

you increase your Agriicultural output so you can 1.) feed your people, and then 2.) export what is left over

But now, you added more mouths to step 1.  leaving just the same small amount of agricultural product to export.

Slowing Population Growth

For example:  You want to educate and train people...so you build a school.

Well if your population growth rate is high - you will soon need two schools, three schools, etc.

Slowing Population GrowthHow to "go about it"1.) educate Women: if they are out working - then they will be less likely to stay home and raise a fmaily, or they will start a family later in life.

2.) Family Planning Services - explain the logic behind PGR - lay out the economic ramifications of having babies every year.  instead of , say, every 3-4 years.  They can also distribute birth control methods

Slowing Population GrowthHow to "go about it"

give families incentives - "if you only have 2 kids - we will give you a tax break"

Educate young people on the benefits of smaller families.

lower the % of workers in agriculture - the GNP per capita will rise and fewer workers are needed home on the farm.