Economic Development Record Essay Example for Free

Economic Development Record EssayEconomies all told nigh the globe develop over time depending on the policies that they undertake to utilise the picks inwardly their boundaries. Nations that utilise their resources hump frugal development and there is great inflow and outflow of goods and services in those rural argonas. Economic reaping rigorouss that the farming is utilising its resources in force(p)ly and this has resulted into appendd productivity within the variant sectors of the parsimony.Industries within the estate outgrowth as a result of the improved economic doing that go out result to the creation of to a greater extent than employ opportunities and then lessen unemployment levels in the area (Daquila 2004). Due to the increase in the human activity of industries and sidetrack in the already existing industries, employment opportunities increase and this brings about a reduction in the number of citizens unemployed. Unemployment is very cr ucial in calculating a nations GDP which is an indicator to a nations achievement. Economic growth depicts an increase in pa capita income.This is the income associated with every individual in the thriftiness although they may not require it in their possession (Daquila 2004). Pa capita income is calculated by dividing the overall value of the thriftiness proportionately divided up between the nations overall preservation. On the former(a) hand, Daquila (2004) defines economic development as the improvement in the sustentation of individual citizens of a nation together with that of the governing bodys that are in place in the nation. A nations system involves economic, political and social framework from which the economy operates in. All the above plus economic growth defines economic development.Economic performance is bankers billd using various tools that include GNP and GDP. GDP estimates the economic performance giving startation to internal and external shares (D aquila 2004). In establishing the GDP, consideration is given to consumption in the nation, white plague by the Government, investments in the nation, trades in the nation that is imports and exports. Consumption comprises of perish equal to(p) non-perish commensurate goods and services within the nation. In determine the non-perishable goods they are assumed to be products that leave last for a period of three years from the duration of manufacturing.GNP refers to the difference between imported products and services and the exported products. The value of this difference added to the value of products services generated within the economy results to the GNP. To evaluate the economic performance of a nation, a number of indicators are used to measure exactly how the economy is progressing towards its economic objectives. A nation has to determine the level of consumption of its individual citizens (Todaro 1997). The level of consumption fashion the proportion an individual sp ends after receiving their income. The re master(prenominal)ing deduct of the income is saved.The consumption level of a nation determines the amount of pitchs in the economy. Savings on the other hand, gos growth in the economy. When individuals increase their nest egg, the financial institutions hold more coin thus the cost of accessing bullion is low. Business entities in the nation are able to access funds at a low cost from the financial institutions. The borrowed funds are used for the expansion of business operations across the industries within the economy. The expansion of business activities results to an increase in case outturn and employment (Munk OHearn 1999).The increase in national production increases the exports of a nation in respect to its imports. The resulting labyrinthine sense of trade will be positive hence the nation has more in terms of foreign reserves that will assist them when it comes to purchasing produces from other countries. Therefore, savings are very vital for the improvement of the performance of an economy. T o induce savings in the economy, the hazard cost of saving has to be high so that individuals can adopt a trend of saving since they are remunerative bountifully for foregoing consumption.It can be concluded that increase in savings results to an increase in investments that contribute towards the growth of an economy. Increased activity within the economy results to an increase in doing levels of the economy (Ros 2000). The nation is able to produce more products services, that are able to meet the necessitate of the nations tribe. Since the products are locally manufactured, they are quite affordable thus individuals are able to spend little and save more. This results to an increase in the real income that individuals have in their pockets and are ready to spend.It should be renowned that increase production has to be met by equal consumption otherwise it could result to losses that will hurt t he economy. Depending on the expansion of the economy, rates of unemployment adjust themselves in more or less the equivalent rates. Increased production will require an increase in manpower that will be able to maintain the production levels. Nations with large populations face a major challenge in absorbing its citizens in the workforce. Individual citizens for a start need to have the relevant skills postulate to perform in divers(prenominal) industries.Education in these economies has to be committed and directed towards instilling individuals with the necessary skills that will be multipurpose in rendering service to the various sectors of the economy. A skilled population results to economic development since the individuals are prone to exercise their skill base towards living a better life thus modify to the economys growth. Economic development depends too on the expenditure of the nations authority (Preston 1999). The government consists of various departments that o versee the carrying out of policies that improve the state of the economy.These departments are given the financial power to implement and improve on the various economic aspects for example the development of basic infrastructure within the economy. In improving the infrastructure, the government releases money from its coffers to the earthly concern. This way, the try of money increases to equal its demand. In most cases, when the Government spends on its development programs, money supply is more than the money demanded. If this situation is allowed to go unchecked it might result to fanfare and later to stagflation a situation where both the unemployment and largeness rates are so high.Therefore, Government involvement in an economy has to be considered carefully when undertaking development projects. Increased rates of production in an economy increases the output levels that may go over and beyond in meeting the local demand. Having satisfied the local demand, wasted pro ducts can be exported to other nations. This facilitates international trade where nations exchange commodities they have in excess for commodities they do not have. Nations should avoid importing more and exporting less as this leads to a negative trade balance.This means that the nation spends more in foreign currency than it receives. Third world and developing nations should consider the above variables if they are to achieve spurred economic growth. They most important is to ensure that their population is skilled so that they can utilise their skills by establishing nigh income generating activity that will create employment opportunities and increase the intact production of their economy. MALAYSIA. The present day Malaysia attained independence in the 1957 from the British administration and accorded the sovereign precondition in 1963 (Malaysia 2008).The Britons established themselves in early 1880s and later went on to retard the state by establishing a self-importance governing authority for the Malaysian people. The Federal States of Malaysia were incorporated in the 1895. The states were under the British control until when the Japanese invaded in 1942. Britain waged war over Japan and in 1945 the states where reinstated under the jurisdiction of the British. In 1948, guerilla movements begun protesting against the colonial authority that resulted to an emergency declaration.In 1965, the Federation state of Singapore disintegrated from the member nations opting for self governance. 1957 saw the attaining of independence of the Federation from the British authorities. In the late 1960s, the Malaysian government sought to balance the economy among its nationals so as to attain economic development by equal distribution of national wealth among its constituent communities (Malaysia 2007). Malaysia has got a rich culture that is evident from its diverse communities and language speaking citizens.Its population consists of Chinese speakers, Indians , English, among other languages (Malaysia 2007). The large population consists of Malaysian natives alongside Chinese, Indians and other local communities. Malaysia consists of individuals who practise polar religious beliefs that include Hindu, Islam, Buddhist, Sikh among other religions. The richness of Malaysia presents it with a competitive workforce than any other nation in the world. The improved economic performance of Malaysia is as a result of a fall in people from different cultures and not allowing politics to ruin their nation.Malaysia has had to maintain a united nation and focus on the togetherness of the nation by avoiding self interests. Malaysia is enriched with essential resources that include crude oil and that it has had to deal with the resource in a careful manner to avoid the negative repercussions that result from the unfair distribution of earthy resource gains. Gross Domestic Product (GDP). The GDP reflects the total activity in the economy. This cons iders both the public and private sectors of the economy and their contribution towards the development of the economy.It also takes into consideration the behaviours of the citizens in regards to spending. Malaysias GDP has been increasing always from 1998-2008 at a rate of 6- 9 per cent. In 2007, the GDP stood at $357. 4 billion. Malaysias population is middling higher than 26 million thus giving a pa capita income of $13,300 (UNDP 2008). The GDP in 1986 was at $28. 2 billion. The GDP increase signifies an increase in all major facets of the economy. Government spending has increased from 16. 4 in 1986 to 12. 0 in 2006.The Governments decision to reduce its spending avoids the negative impacts that result when money supply is more than the money demanded in the economy. Key sectors of the economy that have immensely contributed to the GDP are industrial sector that has been a leading contributor since 1986 to 2006 with a percentage of 49. 9 compared to 38. 5 in 1986. Manufacturi ng follows a close second with 29. 8% in 2006 from 19. 3% in 1986. The provision of services has also reduced from 41. 7% to 41. 3% in 2006. Lastly, agricultural sector has reduced its contribution to the GDP from 19.8 per cent to 8. 7 per cent in 2006 (Malaysia 2007). The above data says that the economy has shifted its dependency on horticulture as a contributor to the GDP. The economy has shifted its focus mainly from agriculture to industrialization where industries are the main contributors to the GDP. Industrial growth is a major boost to the Malaysian economy since it increases the nations production ability and is able to meet the demand of the nations internal demand. This has elevated Malaysia to an industrialized nation due to its potential ability to the production of services products.These increased production levels are able to meet local and international demand hence receiving foreign currencies that will result to a positive capital account. National Consumption and Savings. According to the adult male Bank spread over, the percentage of consumption by the citizens that was used in calculating the GDP decreased from 54. 2 in 1986 to 50. 3 in 2006. That of the government decreased from 16. 4 per cent to 12. 0 per cent . The mean growth per annum boded the citizens consumption had decreased from 9. 1 to 7. 0 and Government spending reduced from 6.5 to 5. 0. The figures show that both the Government and individuals in the nation have adopted a behaviour of saving or reducing their spending habits. By reducing spending, more is saved with the nations financial institutions as the individuals are compensated for foregoing consumption. Savings spur growth in the sense that investors will borrow funds and stretch out their business activities that will result to an increase production. The increase in production across the industry results to increase in the national output.An increase in national output will increase the nations participatio n in international trade thus achieving a favourable trade balance. Low government interference in the economy maintains a stable money supply within the economy. By maintaining stability in money supply in the economy, ostentation is avoided since it negatively impacts the economy. Increased government expenditure increases the money supply in the economy. This increases the purchasing power of individuals in a way that they can be able to purchase goods and victor services in the country.This presents a situation whereby there is much money chasing few goods within the economy. To plumb up this effect the regulating financial authority will need to increase its interest rates. This means that there will be an increase in cost of borrowing that will result to inaccessibility to funds by corporate organisations. Corporations will be unable to maintain their current levels of production thus the need to lay off its workers. This situation will be characterized by increase in unem ployment rates, reducing national output and economic performance.The economy will not be performing at its optimal and will have wasted on its human resource. Therefore, Government involvement in large amounts destabilises a nations economic performance. Income and Output Growth Rates. The export of manufactured products have increased since 1986 from USD6. 009m to USD124. 530m in 2006 (World Bank). The above figures indicate that manufacturing has increased over time and that the economy has shifted its focus to increasing its industrial capacity. By increasing industrial capacity ensures that the nations industry is able to satisfy the ever growing demand of the nation.Economic development requires that a nation first satisfies its population fully before embarking on the satisfaction of outside markets. The nation is required to make sure that all key markets are satisfied and that the demand of a nation is met. These means that different industries will have the capability of serving different markets. Unless a nations population is satisfied, development of an economy is difficult. New industries are formed that provides the final consumer with a product similar to those of another company to invoke competition.Competition among industries ensures the production of quality products that will give the consumer a wide range of choice. Companies will pass to out do one another in both the primary and secondary markets. The increased income and output growth rates can be attributed to the rich natural resources that are found in the nation. The natural resources are tippy materials that are processed into finished products that are exported to international countries. As of 2004, its partners included the US, Korea, Singapore, Germany, Japan, Hong Kong, Indonesia and China.Among the raw products include oil, copper, timber, natural gas and iron (Malaysia, 2007). Most industries in Malaysia are processing based turn up mainly on the western island. They process the raw materials that are extracted into finished products. It is due to this value extension that the nation is mainly industry based and most of the population is employed. The industries in Malaysia also deal in the production of textiles and electronic equipment. They development of industries in the large scale have contributed significantly to the development of the Malaysian economy.Employment and Unemployment Percentages. Malaysias population comprises of the elderly, the middle aged and the young. From the world bank report, children legible for enrolment into primary schools stood at 96 percent for both male female students in 2006. this indicates that the Malaysian government embraces education as a factor to economic development. A skilled population is economically beneficial since the individuals will hit to utilise their skill base towards achieving their own development that will later translate to economic development. sensation of the key issues address ed by the UNDP towards achieving the Millennium Development Goals (MDGs)is human capacity building which means that nation should ensure that they impart skills on their citizens by way of offering courses education to all its citizens and ensuring that it is affordable for all (UNDP). A nation that has an educated population is set to reap benefits from that same population because they will take on at exercising their knowledge in the various fields of expertise and also aim at developing products that will improve on the already existing ones therefore looking for new efficient ways of production.Malaysias literacy rate stands at 89 percent as of 2006 indicating that most of the population is skilled resulting to take down unemployment cases. Malaysia is among the developing nations and is striving to attain the MDGs that will direct them to achieving a developed world status. With about 5 per cent of land is available for farming, Malaysia cannot only depend on farming and tha t the population must acquire some knowledge in other activities. As of 2007, Malaysias unemployment rate stood at 3. 2 per cent and inflation rate stood at 2.1 per cent. The Phillips Curve states that inflation and unemployment are inversely related whereby high inflation results to low unemployment rates and vice versa. This is because when there is high inflation in an economy, most of the population has got some amount of money therefore resulting to some form of engagement in income generating activities. Therefore Malaysia as an economy has really tried in dealing with unemployment levels by making sure that a large part of its population is skilled.The Malaysian Government has formulated a number of policies aimed at improving its economic performance for example the New Economic Policy of 1971 (Malaysia 2007). Government Budget Activity. Government involvement in an economy should be restricted for it can have diverse negative impacts on the economy. The government, however, has got to interfere with severally in the economy since it has to provide for social amenities such as water, education, infrastructure among others for they cannot be left to the control of the private sector.When providing for these amenities, the Government gets money from the state coffers and pays the contractors among other parties that will implement development policies in the nation resulting to increased money supply. By increasing money supply, prices of products rise since the demand for the products will also increase. This will lead to increased production of products and increase national output that will result to more employment opportunities. Therefore government interference is good in the short mellow out as it will stimulate the economic activities.However, continued government interference will hurt the economy in the long run since more money is available in the nation thus raising the prices of the products in the economy. The soaring inflation will then d estabilise the nations exchange rate that will depreciate. With the depreciating of the local currency, Ringgit, imports become costly since industries and individuals will require more money to import products thus hindering the efficiency of engaging in international trade. From the world bank report 2006 on Malaysia, 99 per cent of the population has access to clean water supply.The government has therefore given preference to the basic resources that affects the Malay in their daily lives. The report also gives the figures for Government involvement as current revenue has decreased from 26. 8 per cent in 1986 to 21. 6 per cent in 2006 while the overall budget balance has increased from a deficit of -0. 8 per cent in 1986 to 2. 8 per cent in 2006 (Malaysia 2007). This figures indicate that the government has restricted on its involvement in the economy so as to control the economic impact caused by undue Government involvement.