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What Factors Affect Economic Development Rates?

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  • Written By: Esther Ejim
  • Edited By: Kaci Lane Hindman
  • Last Modified Date: 25 November 2016
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There are many factors that may affect the economic development rates of various countries and societies. Some of these factors include the environment, corruption, consumer behavior, interest rates and health. All of these factors are capable of affecting the economic development rates, either as a single factor or in various combinations.

Corruption is one factor that negatively affects the economic development rates of various countries. Corruption exists in many forms, and it usually has an effect that is detrimental to the members of the given societies and their economic development rates. Most times, public figures engage in both covert and wanton personal enrichment at the expense of the citizens of the country and to the detriment of the economy. Money that could be used in the development of the economy may be transferred to personal bank accounts.

Sometimes, corrupt officials engage in the inflation of the price of certain projects so that they may make money from that project. An example is a corrupt governor who may award several road construction projects to selected contractors at a rate that might be more than several times what the project is actually worth. The excess money may be shared between the corrupt official and his or her comrades. This misappropriation of funds affects the economic development rates of various countries.

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Consumer behavior is an important factor that is related to economic development rates. The needs and preferences of consumers shift and change very often. It is the job of various financial experts to study the market and consumer trends with a view to anticipating such changes so as to take proactive steps to mitigate the effects. For instance, a large manufacturing country with an economy that is dependent on items like cars and other forms of vehicles should be able to predict that there is a push to move away from vehicles that use fossil fuels.

Most car companies have already come up with various versions of prototypes of vehicles that run on alternative forms of energy, such as electric cars and hybrids. It is quite clear based on the effects of climate change and the need to be more environmentally responsible that there will be more demand for such vehicles in the near future. Various governmental policies also affect the decision to manufacture such vehicles. The ability to predict such consumer trends is a factor in the sustainability of economic development rates.

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