Effect Model of Development
Posted by LeGianT on July 9, 2008
When I created this three-wheel model of leveraging development of infrastructure for the class IBUS 815 of MBA program in SFSU, I really had some thoughts and believed in it. Also, I’m sure there are many argument out there supporting or criticizing it, and hope that I’m not copying any ideas.
Let’s me explain it in my own understanding.
- –The first wheel of model, economic growth, considered as main force to development and increasing living standard of population involved in this process. When it starts moving and rotating by factors like investment of infrastructure, openness of policy, reduction of trade barriers, integration into global economy, it will create many good effects. Increasing number of jobs is the one. Other is increasing number of products and services, or encouraging a fair competition, which in turn reducing cost of goods. Both of those effects are better off for people who having more income and paying out less, as well as their power of purchasing increases. Moreover, that movement will help to boost up business sector because of expanding markets, increasing consumers, and reducing cost of production due to mass production. Thanks to those benefits, business is gaining more profit out of cost spending, which in turn raising income of workforces, or people. As a result of economic growth, the increase of living standard will be sure happened.
- –The second wheel, business expand, can occur when business operate on an affordable and reasonable infrastructure like telecom, commercial, or transportation. It means that business can gain more efficient and effective; by lowering down input costs; by fastening speed of production; and by raising better management. With that expanding of business, pushing up the growth of economics appears. The more revenues business has, the more taxes to government contributes. The more profits companies gain, the more re-investments spend out. Thus, it will help to develop economies more and more, leverage living standard larger and larger.
So, in my mind, there are two things support increasing of living standard including investment of infrastructure and encouragement of doing business, which governments and the world at large should implement to get into a better planet.