Economic development – development that improves the standard of living of people in a

country by increasing economic activity.

Economic development focuses on the economic growth of a country. An economy is healthy

when there is an increase in the value of goods and services produced by that country. The main
measure of economic health is the GDP per capita (per capita income). Per capita income is the
total income earned from goods and services produced by a country in one year divided by the
total population for that country in that year.

Neo-colonialism – the geopolitical practice of using capitalism and business globalisation by

countries from the developed world in order to influence the internal affairs of the countries of
the developing world.This term is usually used in the context of the (former) colonial powers
who continue to apply existing and past international economic arrangements their former
colonies.

Recession – a period of time during which there is negative economic growth.

Recession is characterised by the following:
• A rise in unemployment rates as companies try to cut costs.
• Anti-competitive mergers and bankruptcies.
• A credit crunch, or a shortage of money for banks to lend people.

Causes of Recession
1.​ Inflation: this occurs when there is a gradual increase in the price of goods and services
due to increased production costs, higher energy costs or national debt. Consumers may
seek government control on the increase of food prices.
2.​ Rising exchange rate: this makes exports expensive and reduces demand for them.
3.​ Political unrest: this can cause a drop in foreign investment.

Ways to Stimulate Growth and Economic Recovery

1.​ Strengthen regulatory bodies and government policies to revive the economy, such as
creating industrial parks and selling government bonds and securities to raise revenue.
2.​ Protect local industry with a ‘buy local’ campaign and increase funding for small
businesses.
3.​ Implement lower interest rates to increase the money supply so that consumers can have
money to spend on goods and services.

Sustainable Development – a comprehensive approach to development that takes account of

social and economic as well as environmental aspects. It is a long-term process.
Sustainable development is the planned and balanced development of society's resources to
provide for itself without compromising the ability of future generations to meet their needs.

Human Development – development concerned with improving people’s well-being through

better opportunities and freedoms and trying to ensure an individual’s basic needs are met for
food, water and housing.

The four pillars of the Human Development Paradigm:

• Equity – people must have access to equal opportunities.
•Productivity–people must be able to increase their productivity and participate fully in the
process of income generation and remunerative employment.
• Empowerment – development must be by the people, not just for them.
• Sustainability – access to opportunities must be ensured not only for the present generations but
for future generations as well.

Factors Affecting Human Development

Poverty is when individuals do not have the basic requirements necessary for a good quality of
life. Combating poverty is therefore necessary for human development to be achieved. These
requirements would include food, clothing, water, shelter, employment, health, education, social
services.

Combating Poverty:
1.​ establishing a government employment scheme, with the uneducated poor benefiting;
2.​ universal education and scholarships where students can access free transport, books,
internet and school meals;
3.​ obtaining aid from aid agencies;

Education and adult literacy – the adult literacy rate is the percentage of adults who can read
and write. Literacy affects a person’s independence and therefore their empowerment. A
well-educated population tends to result in higher entrepreneurship activity. High rates of
illiteracy reflect a shortage of schools and trained teachers. Uneducated parents are more likely
to not vaccinate their family against diseases or provide sanitation, basic healthcare and
nutritious food preparation. Education has also been linked to higher life expectancy due to
better employment, income and quality of life.

• Life expectancy at birth (LEB) refers to the average number of years that a new-born baby can
expect to live. It is a reflection of the level of development and affluence of a place, and is
directly affected by the quality of maternal health. It will also depend on the health facilities
available, personal health habits, occupation and nutritional levels. For example, universal access
to sports and recreation facilities would tend to increase life expectancy, while the occurrence of
war or life threatening illnesses such as HIV/AIDS would decrease it. Women biologically live
longer than men, they also tend to take fewer risks and have less dangerous jobs.

• Self-esteem of a people and society is attached to how they view their value and role in the
world. Others’ views of a society can also shape this, but it should not be the only measure.
Honesty and integrity within a society is important for the preservation of dignity, a pride in local
culture and respect for and tolerance of others. Freedom to make dreams into tangible goals is
also an important societal trait to cultivate.

GDP – the total value of all the goods and services produced by a country over a year.

GDP is a measurement of a country’s total national income, or the value of its goods in
production and the services provided by it for a year, no matter the ownership. It is calculated
from government figures, although these cannot report certain areas of income, such as income
from the informal sector (cash only transactions) or the black market. It does not take into
account taxes or subsidies and can hide inequalities in income. It excludes overseas earnings and
so tends to undervalue countries that are heavily involved in offshore activities. It also does not
reflect any losses in human or natural resources. To make it easier to compare across countries,
GDP is given in US dollars (US$). Usually, GDP is a good indicator of the economy and
standard of living in a country.

GNP – the total value of goods and services produced by a country each year, including earnings
from citizens or businesses located overseas.

Included in GNP is money in the form of investments or remittances from overseas. Remittances
to Caribbean countries from friends and family abroad have been on the rise from 2000, but they
can be difficult to measure. Also included in GNP is money sent back from companies or
properties that are located overseas but owned by locals. It includes the money made in the
country by foreign people and businesses.

The Gini coefficient compares the ideal situation, in which everyone in a country would have
equal income, to who actually receives the income. Values range from perfect equality at 0 to
inequality at 1.

HDI – the Human Development Index combines GNI per capita, life expectancy and the adult
literacy rate into a score from 0 to 1 that indicates a country’s social and economic development

Productivity – a measure of the efficiency of production or the rate of output.This rate can be
increased by the use of advanced or appropriate technology.
Productivity is the level of output produced for each unit of input. Labour productivity is
measured by dividing the total output in a given time bythe number of workers employed for that
time.

Efficiency can be increased by:

• management that is worker-friendly. If people are happy at work, they look forward to their
work the next day and this helps to ensure the business is successful and is able to expand. This
also can be beneficial to each person as they can obtain job satisfaction and professional
development through promotion;
• rewarding productivity, because companies can tie a worker’s output to their income and this
means that more productive employees would receive more pay;
• employing skilled workers and training staff in efficiency;
• reducing the time and resources used to produce items;
• using advanced and appropriate technology to increase output per person.

Internet Penetration
This indicates how many people have access to the internet as a percentage of the total
population. A user is defined as someone over two years old who went online in the past 30 days.

ModernTechnology
Modern technology (technology developed in the last 20 years) and infrastructure can affect
many sectors of the country. Technology can be used to design, manufacture or use goods and
services and can also be useful in organising human activities.

Good governance – when public resources and problems are managed effectively, efficiently and
in response to the critical needs of society. Effective democratic forms of governance rely on
public participation, accountability and transparency.

• be responsive to all citizens’ needs and rights, including the poorest and most vulnerable;
• have transparency in money matters;
• allow for access to information and a free press;
• have accountability for spending and earnings as this can affect credit rating;
• allow independence of the judiciary so that there is less possibility for corruption;
• ensure prudent use of natural resources;
• have an efficient civil service;
• allow freedom of expression and assembly.
Factors Influencing Development

Gender inequality – an imbalance in treatment and quality of life of men and women in terms
of human development, reproductive health, empowerment and economic status.

1.​ Lack of equal access to the workforce deprives society of important skills and
knowledge that would enable it to fully benefit from the contribution to be made by all of
its members, and prevents the economy getting the full benefit of its human potential
2.​ Even if women gain access to professional and managerial positions, they experience a
glass ceiling. This selective access to jobs has stifled the ambitions and potential of
professional women.

Changing Class Boundaries

In plantation society, a closed system existed where status was ascribed on the basis of race,
colour and ethnicity. This resulted in a rigid social stratification in which people were not
socially mobile.

1.​ There has been an improvement in the standard of living of members of the working class
as they became more socially mobile. For example, ex-slaves engaged in non-farming
activities to improve their socio-economic status and in Trinidad a minority of East
Indians became wealthy through business
2.​ Society has been able to harness the potential of more of its members through the
provision of universal education, which has enabled more people from the working
classes to aspire to higher education and the higher echelons of business, commerce and
public life.

Quality and Relevance of Education

Education, or lack thereof, is a key indicator of the level of development. There is evidence that
education has unmatched power to develop human resources by improving lives, particularly for
girls and women.

1.​ Helps people in the Caribbean to improve their quality of life and standard of living by
assisting them to obtain decent work, raising their incomes, increasing productivity and
facilitating upward social mobility, which in turn all fuel economic development.
2.​ Facilitates the continuous development of literacy, numeracy and technical skills. These
then aid further learning of higher-order skills such as problem solving.

1.​ Generally, high rates of illiteracy exist in some Caribbean countries. People lack basic
skills that will enhance their employment opportunities and result in greater productivity.
 2.​ Although literacy rates are high in some Caribbean countries, illegal activities and
domestic violence show uneducated choices and suggest that what people are being
taught may be irrelevant to their lives.

Political Ideologies

1.​ offering clear guidelines for social and economic development;

2.​ sensitising the youth about political issues because these youths become the next
generation of leaders

1.​ lead to and inflame political social conflict, such as coups, plots, revolutions and ethnic
clashes;
2.​ fail to deal with issues of difference: that is, race, colour, ethnicity.

Popular Movements
Popular movements can promote Caribbean development by:
• acting as a stimulus for political and social change by becoming pressure groups or even
revolutionary forces to foster awareness of important issues;
• demanding transparency and accountability by the government;

Popular movements can hinder Caribbean development by stirring up unrest, discord, damage
and disruption.

Government Policies
1.​ By investing in business; Caribbean governments have become major employers,
resulting in reduced unemployment.
2.​ By improving technology, healthcare, education, agriculture and supporting the private
sector.

Government policies can also hinder Caribbean development through obstruction of the setting
up and running of new businesses with processes that take time and cost: making it difficult to
get construction permits and permits to trade across borders;

Distribution of Wealth and Resources

A key feature of Caribbean societies is the unequal distribution of wealth, income and resources
among citizens. Some citizens, especially the elite, live in luxurious conditions, while other
citizens live in poverty or abject poverty, as many do in Haiti.
 1.​ Crime and social unrest increase as a result of poverty. This can act as a deterrent to
foreign investors and tourists, meaning not only a fall in foreign exchange or revenue, but
also higher unemployment rates.
2.​ The concentration of wealth and assets in the hands of the few can be perpetuated by
corrupt practices such as bribery and nepotism.

Entrepreneurial Drive and Activity

There is a direct link between business and economic growth and development. If few people are
willing to take risks and open their own business, the concentration of wealth and economic
power remains in the hands of a few big businesses.

1.​ By creating employment (direct and indirect) and reducing the high unemployment levels
in the Caribbean. For example, hotel projects in the Caribbean generate many local jobs.
2.​ By meeting the growing demand for goods and services, thereby increasing national
income, and paying taxes such as corporation taxes, which assist in funding government
social services and programmes.

1.​ Conversely, restrictive or complex government regulations and policies can create or
augment an adverse business environment for small entrepreneurial start-ups.

Global Conditions
As small, open economies, Caribbean countries are highly exposed to changes in international
economic conditions. These can be changes in international markets, prices and interest rates.

1.​ Small economies or very small domestic markets can make countries economically
dependent on foreign trade and overseas markets and investors.
2.​ Likewise, domestic producers can be put out of business by cheaper imports, or by
consumers’ preference for imported brand-name goods or foreign products

The Contribution of Tourism to Development

1. Employment: tourism creates both direct and indirect employment for Caribbean people.
Direct employment in tourism includes jobs in the hotel sector, restaurants, clubs and tourist
attractions. Indirect employment is created via links with industries that support tourism, such as
agriculture, transportation, construction, distribution of items to hotels and restaurants.
2. Development of infrastructure: revenue generated is used to upgrade and construct roads,
ports, airports, shopping centres, transport systems, parks, telecommunications and housing. Old
and historic buildings are repaired. These developments improve general quality of life.
 1.​ It can result in great harm to the environment through waste management issues and
damage to fragile ecosystems in countries where environmental monitoring and
conservation is minima
2.​ The import bill is high in Caribbean countries that import food for tourists. Hotels, in
particular, may import a large quantity of foods to satisfy the preferences or tastes of their
clients rather than support local agriculture.

Challenges Presented by Tourism

1.​ Marketing, which is vital, requires a high degree of spending, which some governments,
tourist organisations and hoteliers do not possess. While there are benefits to a regional
approach to marketing, a challenge is to persuade tourists that eachCaribbeancountry is
unique.
2.​ There is inadequate training provision in the region and a lack of trained personnel. This
means some reliance on foreign institutions for training and the employment of foreigners
to ensure the skilled and proficient workforce required for a successful tourist industry.

Use of Technology
The availability and use of technology in the Caribbean,as elsewhere,is a key factor in
development. The Caribbean’s economic and human development has been shaped by
technology over history.

1.​ Creates new products and services, which influence economic growth and hence
economic development.
2.​ Helps Caribbean governments to devise strategies to solve problems. In island countries,
the use of ICT is of great value.

1.​ This involves downsizing and automation, such as in the car production and garment
manufacturing industries where automated processes have replaced the traditional,
human-resourced production line. This leads to both an increase in unemployment and a
preference for workers with technical skills who can adjust to rapid changes in
technology.

Natural and Human-made Disasters

The region is susceptible to a variety of natural or environmental hazards caused by extreme
climatic and geological impacts, such as earthquakes, volcanic eruptions, tsunamis, floods,
landslides, drought and storms.
Disasters hinder development in the following ways:
• They can retard development in that they destroy raw materials or natural resources required
for economic growth. These materials and resources are scarce in many parts of the Caribbean.
• They can easily have a negative impact on tourism, on which many Caribbean economies rely.

The culture of the Caribbean can also have an impact on the development of the region.
Attitudes, beliefs, values, priorities and outlook are all shaped by the experience of being
socialised by institutions such as the family, religion, education and the media.

Some examples of how cultural factors can positively affect development include:
• The creation of cultural-based industries, such as in areas of goods, art, food and performance,
are ways to showcase and express the unique Caribbean cultural identity. This both enhances a
sense of cultural value as well as generating income.
• The celebration of unique Caribbean cultural forms serves to underpin human development and
helps foster regional creativity and innovation.