• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month
  1. 1
  2. 2
  3. 3
  4. 4
  5. 5
  6. 6
  7. 7
  8. 8
  9. 9
  10. 10
  11. 11
  12. 12

What makes a country wealthy.

Extracts from this document...


Q 1 What makes a country wealthy. INTRODUCTION: Envision a country where the primary goal of its economic policy is to accumulate a single commodity lets take for example, gold. Now will the accumulation of wealth be beneficial to this economy's members? Yes, this could only be possible if there is another country exists that devotes its power and assets to the fabrication on essentials like food, clothing, and others and that this second country is willing to trade these goods for the gold of our first country. Commodity's Wealth cannot be consumed directly by individuals. One cannot be provided with nutrition or protection from the elements like gold, oil, iron ore and others which are slightly valuable in direct consumption. Hence trade can be possible with such countries who realize the true measure of wealth through production of basic goods and services, so these commodities are valuable for such countries. Figures shows the circular cycle of the economic world. Adam Smith was the first to realize that the Wealth of a Country was neither in the accumulation of commodities nor in the resource reserves that a country may happen to possess. But rather wealth exists in the productive knowledge of its people. The ability to efficiently transform resources (factor inputs) into desired goods and services represents the true source of a country's wealth. COUNTRY'S WEALTH A country wealth consists of its economic factors like natural resources, human resources, capital, enterprise, technology etc. These factors help in the economic development of the country. However economic development is not possible so long as the social institutions cultural attitudes, institutional and political conditions and morel values in a nation do not encourage development and are non economic factors in economic development. ...read more.


Income consists of labor earnings, property income and Government transfer payments. National income consists of the labor earnings and property income generated by the economy in a year. Government takes a share of that national income in the form of taxes and gives back part of what it collects as transfer payments, the post tax personal income of an individual includes the return on all the factors of production, labor and property that the individual owns plus transfer payments from the government less taxes. Wealth consists of the net dollar value of assets owned at a given point of time. Wealth is a stock, while income is a flow per unit of time. A house hold's wealth includes its tangible items such as houses and its financial holdings such as bonds. Items that are of value are called assets while those that are owed are called liabilities. The difference between total assets and total liabilities is called wealth or net worth. NON ECONOMIC FACTORS Non economic factors such as social, cultural and political organizations influence the economic factors and have great importance. CULTURAL ATTITUDES: There are religious and cultural traditions which are not conducive to economic development. Religion gives less inducement to the virtues of thrift and hard work. People are fatalists and therefore do not like to work hard. They are more influenced more by traditional customs and place high values on leisure, contentment and participation in festivals and ceremonies. Thus money is wasted in non economic ventures. Cultural attitudes stand in the way of progress and they keep social economic and political institutions in a state of back ward ness. Thus they are inimical to economic development of the country. People should be imbibed with such religious ideas that may induce them to toward economic progress. ...read more.


So also have the products that have eliminated much of the drudgery formerly associated with housework. Dishwashers, detergents, disposable nappies, washing machines, vacuum cleaners, microwave ovens, refrigerators, were not there to help our great-grandparents when they first set up house. GLOBALIZATION: Another aspect of the constant change that occurs in evolving market economies is the globalization that has been occurring at an accelerating rate over the last two decades. At the heart of globalization lie the rapid reduction in transportation costs and the revolution in information technology. The cost of moving products around the world has fallen greatly in recent decades. More dramatically, our ability to transmit and to analyze data has been increasing dramatically, while the costs of doing so have been decreasing, equally dramatically. On the investment side, the most important result of globalization is that large firms are seeking a physical presence in many major countries. In the 1950s most foreign investment was made by US firms investing abroad to establish a presence in foreign markets. Today, most developed countries see major flows of investment in both directions, inward as foreign firms invest in their markets, and outward as their own firms invest abroad. It is also interesting to note that globalization of investment had big effects on what 'national interest' means. The pension funds and personal savings of most UK citizens are now internationally diversified, making them less dependent upon the future success of Britain. Instead, the citizens of most advanced industrialized countries are accumulating shares in the world economy. The world is truly globalizing in both its trade and investment flows. Today no country can take an isolationist economic stance and hope to take part in the global economy where an increasing share of jobs and incomes are created. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. The Nature of Macroeconomics

    spending = total income paid to factors of production = total cost of production Pg 30 -model * Total output = GDP = total income * X-axis = GDP and Y * Y-axis = total spending or expenditure * AS curve always at 45�, total spending = total output =

  2. Retailing In India - A Government Policy Perspective

    Organized retailers typically adhere to these norms, while counter stores are open almost throughout the year with an average working day per employee amounting to 12-13 hours. d) Non-payment of market rates for inputs: A critical cost advantage for counter stores arises from the fact that they typically pay lower rates for key inputs (i.e., land and utilities)

  1. Case Study: The Home Depot

    Potential development of a substitute product: The main product in the industry was, is and at least for a while will be lumber. A lot of (older) houses need repair in the USA, but it is unlikely that especially for these kinds of houses another product than lumber will be used.

  2. Citigroup has successfully faced the challenges of the 19th and 20th centuries and has ...

    Even in developing countries like India, where people traditionally saved the money largely due to deep felt insecurity, the attitude is changing and the spending is sky rocketing. This also has increased spending in tourism, vacationing and travel. This provides huge opportunities for banks in such markets.

  1. Causes of the Great Depression

    It is a warning to us that our economic world will not always necessarily be safe. In 1929, even in 1928, the warnings of an economic disaster were heeded by some of the Wall Street denizens. It seems clear that everyone involved in the speculative boom of the late twenties knew that eventually stocks would drop.

  2. Bellway Plc is a holding company with subsidiaries; its main subsidiary company is Bellway ...

    for 2004 was �161,400 one of the lowest in the industry, as the average price of the house in England & Wales was �187,971.60 * Wide geographical coverage Bellway's has extensive geographical coverage within the United Kingdom, creating an excellent defence against the regional variances in the housing market and reducing the vulnerability of local price fluctuation impact.

  1. Biography of Adam Smith.

    local consumption using local resources, the entrepreneur's natural inclination contributes to the vitality of the local economy. And because the owner and the enterprise are both local they are more readily held to local standards. Even on pure business logic, Smith firmly opposed the absentee ownership of companies.

  2. Labour is one of the four factors of production along with land, capital and ...

    > % Population at working age (15+) > Participation rate The labour force; > Unemployment rate 6.2% down 0.3% > Participation rate 63.3 % down 0.8% Traditionally the labour force employment can be divided into the following industry groups: > Primary 6% > Secondary (manufacturing) 13% > Tertiary (services)

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work