Sunday 14 April 2024

Factors that Influence Economic Development and Growth

Countries experience cycles of economic growth and recession, which depends on many factors. These include the general health of the markets, consumer preferences and world news, even seemingly unrelated incidents. Although some businesses perform better than others in their respective industry, global factors that affect the industry as a whole must be considered in planning to start or grow a business.

Interest Rates

Interest rates can affect industrial growth in several ways. In industries with large transactions such as vehicle manufacturers or cruise companies, an increase in interest rates may prevent clients from borrowing to finance the purchase of these types of products and services. High interest also discourages companies from investing in new capital and consequently impeding potential expansion. On the contrary, a decrease in interest rates can stimulate industries to grow, which can lead to innovation and increased employment levels.

The Strength of the Currency

The value of the US dollar against other currencies such as the British Pound, Euro, etc. is crucial for companies that are not into import or export of goods. Consumers have the option to buy goods or services originating in the United States or other countries. If the US dollar it strengthens, the companies in the industry that buy supplies from different other nations offer competition in terms of prices. In industries that rely heavily on foreign commodities, such as the garment industry, the entire sector can be lifted or pressured with the strengthening or weakening of the dollar.

Government Intervention

Governmental bodies such as the Environmental Protection Agency, the Food and Drug Administration, or the US Department of Agriculture regulate industries. They maintain the standards that all operators in a sector must follow for the safety of consumers, employees, or natural resources. Different industries are regulated, and it varies from one industry to another. For example, the new safety laws for children’s toys made under the Consumer Product Safety Improvement Act in 2009 threatened to kill many small toy producers when the requirements to test and certify toys were a prohibitive cost for all, even for the big toy manufacturers. The proposed changes to the law can help alleviate the burden on small manufacturers and resellers.

Youth Empowerment

Any country’s future depends on its youth because they are the flagbearer of change and policy in the country. Empowerment of youth is crucial for causing a positive social change because if they are being led on to the right path today, it can lead to the betterment of the country tomorrow, not only economically, but also culturally. A professor, author, and speaker, Sherif Delawar from Egypt, has written many accounts on the Egyptian youth and the subject of empowerment. All of his speeches are available on the internet, and they are something which the young people should surely look out for.

Environmental Impact

The economic growth of an industry can be influenced not only by the effect that products cause on the environment but also by how consumers perceive this impact. For example, the leather apparel market drastically plummeted over the course of a few years in the 1990s when consumers perceived that the raising and killing of small animals was inhumane. Although the industry got back on its feet again with growing international demand, the number of fur producers in the country decreased considerably. If the public sees the products of an industry or a service as harmful or dangerous, most companies in the sector can experience a sharp decline in sales quickly.