• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Economics Higher Level Coursework

Extracts from this document...

Introduction

Economics Commentary 4 Section 5 Title: China to shift infrastructure focus from cities to countryside Source: Xinhua News Agency China's leaders have promoted economic growth in the recent decades. This strategy is successful in terms of increasing the nation's output, yet the inequality in living standards between the cities and the rural areas are also increasing as the riches do not trickle down to the poor. Thus this article discusses how government now sees the need to focus on rural development and improving inequality and rural productivity. To increase economic growth, according to the Harrod Domar model China increased productivity by lowering the capital to output ratio and increase savings so as to promote economic growth. The opposite of the poverty cycle occurs, as people get richer they will have a lower marginal propensity to consume, hence save more. The end result is that they will have higher productivity and income, hence leaving poverty. This implies the need for expanding human and fixed capital, encouraging industrialization. Low Investment Low Productivity Poverty Cycle Low Savings Low Income Due to economies of concentration, industries are more productive when grouped together. ...read more.

Middle

With the failure of the trickle down effect, the government should intervene in the market by increasing rural infrastructure. Since living standards are measured in terms of economic development instead of merely economic growth, intangible factors such as availability of drinkable water, sanitation and education are considered. Without these life in the rural areas would be horrible, thus limiting the productivity of rural labor, which forms most of the population of labor in the country. Since income is a crucial part of one's living standard, in order to improve the income of farmers there is also a need to increase agricultural productivity and promote rural industrialization. For example, the government may invest or subsidize technological improvements in seed technology to increase crop yield of farmers, or promote mechanization and better irrigation in farming. Secondly, to diversify rural "small cottage industries" the government may promote cultural industries such as hand crafting or eco-tourism in rural areas. This will provide an alternative to agriculture, which is prone to low income elasticity and thus low income for farmers. By increasing the income of rural populations the income equality in China will increase. ...read more.

Conclusion

dollars), less than 1 percent of the fiscal income. Currently, half of China's villages do not have running water. Besides, former investment in rural areas mainly focused on macro-projects like riverbank construction, and failed to directly benefit the farmers for most of the time. To narrow down the increasing gab [sic] between urban and rural areas, the Chinese government decided to" let the sunlight of public finance shine in the countryside ", to promote construction of road, water, electricity and other infrastructure in rural areas. Experts with the State Development and Reform Commission predicted that to build basic infrastructure in rural areas across the nation will cost at least 4 trillion Yuan (495.66 billion U.S. dollars). Therefore, other fund sources are needed to explore besides government spending. Tang Min, chief economist of Asian Development Bank in China, said that reform of rural financial system is as pressing as investment in rural economic development and the improvement of the farmers' life. Farmers are hard to get loans due to out-of-date financial mechanisms. Government statistics show that at least 200 billion Yuan (24.78 billion U.S. dollars) worth of funds are drawn from the rural areas by the financial entities every year. Copyright (c) 2005 Xinhua News Agency ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our International Baccalaureate 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 International Baccalaureate Economics essays

  1. Macro Economics Notes

    of housing, oil, food and other commodities rose to a level that no-one could afford. Therefore, this recession is payback time. In the recession, the inefficient businesses are failing, houses, oil, stocks etc are falling in price to a sensible level and from there the world can gradually recover.

  2. Growth and Development Problem Set - IB Economics exam questions and answers.

    knowledge, measured by adult literacy and the combined primary, secondary and tertiary enrolment ratio; and (iii) a decent standard of living, measured by GDP per capita (in US$). The HDI is very useful tool for countries and governments wishing to devise policies that focus on development.

  1. Economics Higher Level Coursework

    Since the product lines of the acquired companies are different, the market demands of these products manufactured are also diversified; even if one product faces a dropped demand the others may not be affected. Less risk bearing means less need to hold stocks, which lowers the cost of stockholding.

  2. Economics Coursework - Demand&Supply

    the industry and traditionally accounts for nearly a fifth of annual sales. If things do not improve, the SMMT is forecasting that only 1.72m new vehicles will be sold in 2009, compared with 2.13m in 2008. However, there was one bright note with the rise of the small car segment,

  1. Practice coursework

    The government would get more money from this, so it would improve as much. The oil companies would want to drill and search for oil in more remote areas, causing more deforestation, and much more money spending by the companies and time.

  2. Extended Essay Economics

    inflation or an increased demand for paper; a significant factor for this increase in profits could arguably be the exchange rate. In the last couple of years, the gap between the fixed and parallel exchange rates has widened. A few years ago, it was 2.5 Bs to the dollar on

  1. 15 Historical Economic Questions on Mercatilism and the Development of European Countries.

    At the time of Smith?s observations and disputes, mercantilism was the key economic ideology that was currently implemented. This system emphasized the utilization of high import duties, subsidies to favored companies and government granted monopolies. These policy tools during the time were dominantly believed to maximize the wealth of nations, Smith saw these tools as ?impoverishing a nation?.

  2. Analysis of "The End of Work" by Jeremy Rifkin discusses the decline of the ...

    resist the introduction of telephone, it offers a lot of advantages and not a lot disadvantages. I agree to his argument, however, Rifkin neglect to understand that, for example if a business owner does not take the route of technology development then he or she will ultimately loose out to

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