The relationship between the environment and economic development may be accessed from two different points of view. One point of view is that factors like political climate, governmental policies and culture in the environment affects economic development. A second viewpoint is the manner in which the activities associated with economic development affect the environment.
Environment and economic development are linked in the sense that the factors in place in the environment have a huge impact on the rate of economic development for a region. A country with a politically unstable reputation will not be able to attract necessary investors and businesses from interested investors both within and outside the country. A local investor with the resources to establish a business may prefer to take his or her money elsewhere, to a country with a reasonably stable government. This lack of investment by entrepreneurs is due to the fact that there is no guarantee of any security for their investments. Lack of security also means that the business will not flourish in the way it would in a country with a stable government.
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Another way in which environment and economic development are related is due to the fact that a country with unfavorable government policy will not attract as much investors or foster economic development as much as a country with favorable government policies. Such policies may be in the form of taxation, import quotas or other forms of regulation. The taxation policies may be favorable or unfavorable. In some cases, the government in some countries may reduce the taxes paid by organizations in certain industries with a view to attracting investors, while also encouraging the development of certain sectors. An example is the solar energy and other green energy sector that routinely receives various tax concessions from different western governments as a form of encouragement.
Certain types of culture help foster the relationship between environment and economic development. Some cultures are more receptive and open than others. Such open cultures are quick to embrace new ideas, new technologies and other facets that will help in the economic and social development of countries. The negative link between these two concepts lies in the way in which the byproducts of economic development affect the environment. Such a link includes issues like emissions from industrial plants, the runoffs from fertilizers used on large scale agricultural farms, and the various emissions from vehicles used to transport both raw materials and finished goods.