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Developing countries experience cultural changes due to economics growth. There will be an upside and negative effects as well

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Enquiry 6.5 Richer country – richer people? (p222-229)

Developing countries experience cultural changes due to economics growth. There will be in upside and negatives effects as well:

Changes in use of land: What would have been used initially for farming – land will used to develop the infrastructure. Hotels, schools, roads, residences etc. will take the place where farmers once farmed land. As a result…

Change in employment: Farmers will find they are unemployed and will have to develop skills in other industries- usually either manufacturing, construction or service industries. This reduces the size of the primary sector industries (farming) and increases the secondary (construction, manufacturing) and tertiary (services) sector.

Changes in Distribution of Income: Some people will therefore find they can afford more or less and therefore their standard of living is likely to change. Farmers and fisherman may find they are making less money in new employment or may find it hard to gain employment altogether. Others may find they are earning a higher income and better standard of living by starting their own business (including becoming a franchisee) or by gaining new scarce skills which allow them to improve their standard of living. Also through development some towns attract more tourist – and foreign currency again increasing real income of residence and standard of living and a …

Changed in lifestyle: as more goods are purchased people will experience a change in lifestyle. For example changes in modes of transport, entertainment, cuisine in the area.

Demographic changes: With economic growth, people live longer, have better education and health services and the standard of living rises. As there is more income in the economy the government can provide these services and invest in the country for future development and more economic growth. This process can however take a while to affect all the population. Some people will still be working in the primary sector but on a smaller scale and will be competing with imports this would result in an uneven distribution of income as they would or could not develop skills in order to increase their employment potential.

Governments can trigger economic growth by helping industry in the country to grow. These can be done by allowing easier planning permits, setting up industrial areas and investing in the infrastrure to help large enterprises function efficiently, employ people, increase incomes, increase spending, increase demand, increase the need for other businesses (including small local enterprises) and therefore improved standards of living and economic growth.

The government also benefits from economic growth in two ways – reduced unemployment, social services and other payments to individuals and increase receipts from income and corporate taxes, business rates and tax on spending (in the UK – VAT)

We have seen how businesses must consider things other than the ‘bottom line’. Owners may want to make a profit however, the environment must also be considered. More and more businesses are adopting an ethical policy – considering workers, suppliers, government, local and wider community, customers and the environment. One must also consider if businesses use their ethical policy as a marketing tool to win the trust and loyalty of different stakeholders.

Ethical policies also consider how once country trades with another – giving fair prices and helping develop the country. As far as international trade is concerned, the more exports a country has compared to imports the stronger the currency becomes (demand for exporters currency increases). One simple rule to remember regarding international trade:

S – Strong

P - Pound

I – Imports

C – Cheaper

E – Exports

D – Dearer  

So the country may experience a lose of competitive advantage when their exports become to expensive compared to products produced in the country importing UK goods (for example). On the same token competitive advantage can be gained by exporting goods when the currency is weaker.

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