POSSIBLE ASSESSMENT 1 TEST QUESTIONS AND POSSIBLE ANSWERS
QUESTION 1
Walt Rostow took a historical approach in suggesting that developed countries have
tended to pass through five (5) stages to reach their current degree of economic
development. Briefly discuss Rostow’s five stages of development
Answer
1. Traditional society. This is an agricultural economy of mainly subsistence
farming, little of which is traded. The size of the capital stock is limited and
of low quality resulting in very low labour productivity and little surplus
output left to sell in domestic and overseas markets
2. Pre-conditions for take-off. Agriculture becomes more mechanised and
more output is traded. Savings and investment grow although they are still
a small percentage of national income (GDP). Some external funding is
required - for example in the form of overseas aid or perhaps remittance
incomes from migrant workers living overseas
3. Take-off. Manufacturing industry assumes greater importance, although
the number of industries remains small. Political and social institutions
start to develop - external finance may still be required. Savings and
investment grow, perhaps to 15% of GDP. Agriculture assumes lesser
importance in relative terms although the majority of people may remain
employed in the farming sector. There is often a dual economy apparent
with rising productivity and wealth in manufacturing and other industries
contrasted with stubbornly low productivity and real incomes in rural
agriculture.
4. Drive to maturity. Industry becomes more diverse. Growth should spread to
different parts of the country as the state of technology improves - the
economy moves from being dependent on factor inputs for growth towards
making better use of innovation to bring about increases in real per capita
incomes
5. Age of mass consumption. Output levels grow, enabling increased
consumer expenditure. There is a shift towards tertiary sector activity and
the growth is sustained by the expansion of a middle class of consumers.
QUESTION 2
Population may be considered positive hindrance in the way of economic development
of a country. In a ‘capital poor’ and technologically backward country, growth of
population reduces output by lowering the per capita availability of capital. Too much
population is not good for economic development. Discuss any five (5) consequences of
negative population growth.
Answer:
1. Population reduces the Rate of Capital Formation:
In underdeveloped countries, the composition of population is determined to
increase capital formation. Due to higher birth rate and low expectation of life in
these countries, the percentage of dependents is very high. Nearly 40 to 50 per
cent of the population is in the non-productive age group, which simply
consumes and does not produce anything.
In under developed countries, rapid growth of population diminishes the
availability of capital per head, which reduces the productivity of its labour force.
Their income, consequently, is reduced and their capacity to save is diminished
which, in turn, adversely affects capital formation.
2. Higher Rate of Population requires more Investment:
In economically backward countries, investment requirements are beyond its
investing capacity. A rapidly growing population increases the requirements of
demographic investment, which at the same time reduces the capacity of the
people to save.
This creates a serious imbalance between investment requirements and the
availability of investible funds. Therefore, the volume of such investment is
determined by the rate of population growth in an economy. Some economists
have estimated that for maintaining the present level of per capita income, 2 per
cent to 5 per cent of national income must be invested if population grows at 1
per cent per annum.
In these countries, population is increasing at the rate of about 2.5 per cent per
annum and 5 per cent to 12.5 per cent of their national income and hence the
entire investment is absorbed by demographic investment and nothing is left for
economic development. These factors are mainly responsible for stagnation in
such economies.
3. It reduces per Capita Availability of Capital:
The large size of population also reduces per capita availability of capital in less
developed countries. This is true in respect of underdeveloped countries where
capital is scarce and its supply is inelastic. A rapidly growing population leads to
a progressive decline in the availability of capital per worker. This further leads to
lower productivity and diminishing returns.
4. Adverse Effect on per Capital Income:
Rapid growth of population directly effects per capita income in an economy. Up
to ‘income optimizing level’, the growth of population increases per capita
income but beyond that, it necessarily lowers the same. In a sense, so long as the
rate of population growth is lower than the per capita income, rate of economic
growth will rise but if population growth exceeds the rate of economic growth,
usually found in the case of less developed countries, per capita income must
fall.
5. Large Population creates the Problem of Unemployment:
A fast growth in population means a large number of persons coming to the
labour market for whom it may not be possible to provide employment. In fact, in
underdeveloped countries, the number of job seekers is expanding so fast that
despite all efforts towards planned development, it has not been possible to
provide employment to all. Unemployment, underemployment and disguised
employment are common features in these countries. The rapidly rising
population makes it almost impossible for economically backward countries to
solve their problem of unemployment.
6. Rapid Population Growth creates Food Problem:
Increased population means more mouths to feed which, in turn, creates
pressure upon available stock of food. This is the reason; the under-developed
countries with rapid growing population are generally faced with a problem of
food shortage. Despite all their efforts for raising agricultural production, they are
not able to feed their growing population.
Food scarcity effects economic development in two respects. Firstly, inadequate
supply of food leads to undernourishment of the people, which lowers their
productivity. It further reduces the production capacity of the workers, Secondly;
the deficiency of food compels to import food grains, which places as
unnecessarily strain on their foreign exchange resources.
7. Population and Farming:
In less developed countries the majority of population lives in, where agriculture
is their mainstay. The growth of population is relatively very high in rural areas
and it has disturbed the land man ratio. Further, it has increased the problem of
disguised unemployment and reduced per capita farm product in such
economies, as the number of landless workers has largely increased followed by
low rate of their wages.
The low farm productivity has reduced the propensity to save and invest. As a
result, these economies suffer largely for want of improved farm techniques and
ultimately become the victim of the vicious circle of poverty. Thus rerated farming
and the process of overall development.
8. Population and Vicious Circle in Poverty:
Rapid growth of population is largely responsible for the perpetuation of vicious
circle of poverty in underdeveloped countries. Because of rapid growth of
population, people are required to spend a major part of their income on bringing
up their children.
QUESTION 3
What is the Solow model of economic growth?
Answer:
The Solow Growth Model is an exogenous model of economic growth that
analyzes changes in the level of output in an economy over time because of
changes in the population growth rate, the savings rate, and the rate of
technological progress.
What does the Solow growth model show?
Answer:
The Solow–Swan model is an economic model of long-run economic growth set
within the framework of neoclassical economics. It attempts to explain long-run
economic growth by looking at capital accumulation, labor or population growth,
and increases in productivity, commonly referred to as technological progress.
What effect do population growth, new technology and higher savings have on income
growth?
Answer:
➢ An increase in the population growth rate lowers the steady-state level of
per capita output.
➢ A higher saving rate does not permanently affect the growth rate in the
Solow model. A higher saving rate does result in a higher steady-state
capital stock and a higher level of output. The shift from a lower to a higher
steady-state level of output causes a temporary increase in the growth rate.
➢ In some newer theories of growth, a higher saving rate may permanently
raise the rate of economic growth.
What is steady state in Solow model?
Answer:
A steady state economy is an economy of stable or mildly fluctuating size.
An economy can reach a steady state after a period of growth or after a period of
downsizing or degrowth.
What are the three key assumptions of the Solow model?
Answer:
➢ One composite commodity is produced.
➢ Output is regarded as net output after making allowance for the
depreciation of capital.
➢ There are constant returns to scale. In other words, the production function
is homogeneous of the first degree.
QUESTION 4
What is the role of education in economic development?
Answer
Education in every sense is one of the fundamental factors of development.
Education raises people's productivity and creativity and promotes
entrepreneurship and technological advances. In addition, it plays a very
crucial role in securing economic and social progress and improving income
distribution.
What is the role of health in economic development?
Answer
Better health is central to human happiness and well-being. It also makes an
important contribution to economic progress, as healthy populations live longer,
are more productive, and save more. Many factors influence health status and a
country's ability to provide quality health services for its people.
Why is education important for the development of a country?
Answer
Education is an important investment in a country as there are huge
benefits. Education guarantees lifetime income; it promotes peace and reduces
dropout rates from schools and colleges and encourages healthy competition.
Many children dropout form colleges as they are not aware of the advantages of
college.
How can education improve the economy?
Answer
A country's economy becomes more productive as the proportion of educated
workers increases since educated workers can more efficiently carry out tasks
that require literacy and critical thinking. In this sense, education is an
investment in human capital, similar to an investment in better equipment
Why is development of the country important?
Answer
Economic development helps to protect the local economy from economic
downturns by attracting and expanding the region's major employers. The
increased presence of companies in the region translates to increased tax
revenue for community projects and local infrastructure.
QUESTION 5
What is income convergence?
The idea of convergence in economics (also sometimes known as the catchup effect) is the hypothesis that poorer economies' per capita incomes will
tend to grow at faster rates than richer economies. As a result, all economies
should eventually converge in terms of per capita income.
Why do many economists expect income convergence between developed and developing
countries?
The term convergence is a hypothesis in economics that believes that
there would be a time when developing nations will grow faster than
the developed ones in terms of per capita income. This means that the stage
of diminishing returns is still far for the developing nations.
Why do the developing countries experience a degree of convergence over time?
Over time, both productivity and the GDP per capita have increased in
industrialized countries. Interestingly, the productivity and the GDP per capita
of these nations have approached one another over time.
This convergence signifies that all industrialized nations are approaching a
common level of prosperity.
Why are some countries not developed?
Climate - many of the poorest countries are in the tropics where it is hot, the
land is less fertile, water is scarce, and diseases flourish. Natural resources
- some raw materials are valuable and can help a country develop if they have
the resources to collect and process them, eg oil, diamonds, forests and gold.
Are poor countries catching up with rich countries?
Returns on capital investments in capital-rich countries are not as strong as
they would be in developing countries. Poorer countries are also at an
advantage because they can replicate the production methods, technologies,
and institutions of developed countries.
Are living standards of developing and developed nations converging? Briefly explain
Answer:
Evidence of unconditional convergence is hard to find
If growth conditions for DC and LDCs were similar, one would expect
convergence based on two factors
Technology transfer
Factor accumulation would expect investments to be lower in DC where capital
intensity is higher
Higher investments rates will occur either through FDI or domestic sources
But there is increasing evidence of “per capita income convergence,” weighting
changes in per capita income by population size
QUESTION 6
Economic, social, political and institutional mechanisms, both public and private
necessary are required to bring about rapid and largescale improvements in living
standards of people living in least developed countries. What are the key development
challenges facing the developing countries? Discuss substantially any five-development
challenges facing countries.
Answer:
1. Domestic resource mobilisation?
There was strong emphasis on LDCs building capacity to mobilise financial
resources locally. Tax reform – including the ability of the state to efficiently
collect and manage tax revenues – could help raise finance in LDCs. What strikes
me is the fact that the informal sector still constitutes a marked share of the
economy in most of these countries. Yet in Antalya, discussion on the informal
economy was missing. How can the informal sector be taxed?
It is inevitable that the LDCs will continue to rely heavily on foreign assistance to
harness the opportunities in the informal market, and enhance their technical and
institutional capacities to mobilise resources efficiently.
2. Limited economic diversification?
LDCs depend heavily on primary commodities, leaving them exposed to volatility
in commodity prices. This leads to imbalances in balance of payment and
economic instability. Some African countries such as Angola and Mozambique
have been hit particularly hard.
Some suggest this economic vulnerability is a major hindrance to LDCs'
graduation. I think this is an outdated argument – there isn't sufficient evidence
that primary product price volatility reduces total productivity or impacts GDP
growth. In fact, much evidence suggests the most limiting factors are weak
human resource and unstable institutions; countries that have made sufficient
investment in building their human and institutional capital have been able to
withstand temporary economic shocks.
So, yes to economic diversification, but priority should be given to investments
directed towards enhancing human and institutional capital.
3. Lack of progress on 'means of implementation'
Many LDCs expressed frustration at lack of global support for means of
implementation, including lack of reform to persistently unfavourable trade
regimes, the divergence between pledged financial assistance and monies
actually delivered, and token technology transfer. For example, the G8 group of
countries fell more than US$10 billion short on its Africa pledges for 2010 alone.
Important as it is to focus on local reforms, it is crucial that sufficient attention is
given to means of implementation. Without this, the graduation of LDCs remains
a mere aspiration.
4. Proliferation of goals and targets
LDC delegates voiced concern about the mind-boggling number of goals and
targets set by various global frameworks, including the Sustainable Development
Goals, IPoA, the Paris Agreement on climate change and the Convention on
Biological Diversity, to name a few.
Keeping track of all these targets is exhausting and not necessarily the most
efficient way of implementing development agendas. A coherent process with
streamlined reporting mechanisms is the preferred way forward.
The private sector: high expectation
I was also struck by the emphasis on the role of the private sector both in
financing and delivering development in LDCs. This has gained attention
following growing donor fatigue and dwindling Official Development Assistance
(ODA).
Indeed, it is evident that ODA flows to LDCs have declined in real terms in the
past few years. This is due to a number of reasons including a slowing economy
in the developed world, corruption and 'poor governance' on the recipient side,
the recent shift of resources to humanitarian crises, not to mention the rise of
right-leaning populist governments in Europe.
QUESTION 7
On September 8, 2000, the United Nations General Assembly adopted the Millennium
Declaration. The Millennium Development Goals (MDGs) emerged as a means to meet
some of the aspirations of the Millennium Declaration. The MDGs comprise eight broad
objectives and fifteen more specific “target” policies to reach those objectives. Discuss
eight broad objectives and one specific target for each objective.
Goal 1 Eradicate extreme poverty and hunger
Target 1: Halve, between 1990 and 2015, the proportion of people whose income is less
than $1 a day
Target 2: Halve, between 1990 and 2015, the proportion of people who suffer from
hunger
Goal 2 Achieve universal primary education
Target 3: Ensure that, by 2015, children everywhere, boys and girls alike, will be able to
complete a full course of primary schooling
Goal 3 Promote gender equality and empower women
Target 4: Eliminate gender disparity in primary and secondary education preferably by
2005 and in all levels of education no later than 2015
Goal 4 Reduce child mortality
Target 5: Reduce by two-thirds, between 1990 and 2015, the under-five mortality rate
Goal 5 Improve maternal health
Target 6: Reduce by three-quarters, between 1990 and 2015, the maternal mortality
ratio
Goal 6 Combat HIV/AIDS, malaria, and other diseases
Target 7: Have halted by 2015 and begun to reverse the spread of HIV/AIDS
Target 8: Have halted by 2015 and begun to reverse the incidence of malaria and other
major diseases
Goal 7 Ensure environmental sustainability
Target 9: Integrate the principles of sustainable development into country policies and
programs and reverse the loss of environmental resources
Target 10: Halve, by 2015, the proportion of people without sustainable access to safe
drinking water and basic sanitation
Target 11: Have achieved, by 2020, a significant improvement in the lives of at least100
million slum dwellers
Goal 8 Develop a global partnership for development
Target 12: Develop further an open, rule-based, predictable, non-discriminatory trading
and financial system (includes a commitment to good governance, development, and
poverty reduction—both nationally and internationally)
Target 13: Address the special needs of the least developed countries (includes tariffand quota-free access for exports, enhanced program of debt relief for Highly Indebted
Poor Countries and cancellation of official bilateral debt, and more generous Foreign
Aid for countries committed to poverty reduction)
Target 14: Address the special needs of landlocked countries and small island
developing states
Target 15: Deal comprehensively with the debt problems of developing countries
through national and international measures in order to make debt sustainable in the
long term Target 16: In cooperation with developing countries, develop and implement
strategies for decent and productive work for youth
Target 17: In cooperation with pharmaceutical companies, provide access to affordable
essential drugs in developing countries
Target 18: In cooperation with the private sector, make available the benefits of new
technologies, especially information and communications
QUESTION 8
Development is about realizing very fundamental human values and finding the means
to extend the fruits of these values to the greatest majority of the world’s population.
These human values include, but are not limited to:
1. the opportunity for meaningful employment, under honorable conditions, and
the possibility to provide for one’s self and family;
2. employment under conditions that comply with the following four core labor
standards of the International Labour Organization: (1) freedom of association
and the effective recognition of the right to collective bargaining; (2) elimination
of all forms of forced or compulsory labor; (3) effective abolition of child labor; (4)
elimination of discrimination in respect of employment and occupation;
3. sufficient food, shelter, and other amenities for a decent and meaningful life
above the poverty line;
4. the opportunity to pursue education and the increased quality of life it
promises;
5. a reasonable level of health care;
6. social security for old age;
7. democracy and political participation in the life of the community and society;
8. equal treatment under the law and in the economy, regardless of race, gender,
class, ethnicity, religion, nationality, or other differences; and
9. respect for individual dignity
QUESTION 9
For the less-developed nations, development compels them to undertake substantial
qualitative structural change. The future cannot be just an extension of the past, of
doing more of what is now being done. Change must be dramatic. Name and explain
these five (5) qualitative structural changes.
1)
Increase in industrialization.
•
Economic growth and development are strongly associated with an
increasing share of a nation’s output and labor force involved in industrial,
especially manufacturing, activities, at least initially. Over time, services
become increasingly important too as an economy matures even further.
•
Wages tend to be higher in the industrial sector than in agriculture,
because the level and use of technology are greater. This leads to both
higher levels of production and worker productivity, and the resulting
higher income that is created is shared by workers and owners of
enterprises.
•
Production methods also become relatively intensive in the use of
knowledge—human capital and of physical capital. As part of this
unfolding process, the urban population tends to grow both relatively and
absolutely compared to the rural population, as rural workers migrate to
the cities in search of the higher incomes promised by urban and industrial
pursuits.
2) Decrease in agriculture.
•
Parallel to the expansion of the industrial sector of the economy is a
decline in the share of agricultural output in total output. This also means a
reduction in the share of the total labor force employed in agriculture and a
decrease in the share of the rural population within the total population.
•
The increase in industrialization and the decrease in agriculture are
intimately related. “Surplus labor” (i.e. low-productivity labor) in agriculture
migrates to urban areas in search of the promise of better-paid and
higher-productivity industrial employment. It is this shift of workers from
low-productivity agricultural employment to higher- productivity industrial
employment that contributes to a sharp increase in total national output
when this process of internal labor migration is initiated.
•
Technological progress and labor productivity are typically lower in the
primary (agriculture, mining, and fishing) sector, but over time, output per
person approaches the level reached in the industrial, or secondary, sector
as the fewer workers in agriculture produce more output per worker.
•
One leading development expert has written that “economic
development is a process of moving from a set of assets based on primary
products, exploited by unskilled labor, to a set of assets based on
knowledge, exploited by skilled labor” (Amsden 2001: 2).
3) Changing trade patterns.
•
Successful development is almost always marked by a maturation in the
structure of trade, as a limited range of primary exports—agriculture and
fishing products, unprocessed mining and other extractive minerals, and
forestry products—is replaced by both a greater diversity of export
products and by an evolving export mix toward manufactured goods and
services.
•
Successful developers shift from a dependence on the traditional, primary
export products that marked their colonial past toward, first, simpler
manufactured and non-traditional primary exports, and ultimately toward
more complex commodity exports, from motor cars to computers to
biotechnology products to information technology to nanotechnology and
other types of high value-added production.
•
As a result of this evolutionary transformation, manufacturing exports
typically come to dominate the export profile of more developed nations as
the share of primary exports in total exports shrinks within the export
profile.
4) Increased application of human capital and knowledge to production.
•
Economic growth and development require increases in the productivity of
labor in all sectors of the economy if incomes and the standard of living of
the population are to rise. This is achieved partly, but quite importantly,
through improvements in the training and education of the existing and
future labor force by means of increases in what economists call human
capital accumulation. This takes place not only through the formal
schooling process but also via “learning-by-doing” at the workplace.
•
Increased productivity of labor is also a consequence of an expansion in
the use of more physical capital, that is, more machines and tools which
typically embody more advanced technology and knowledge that can help
to make a properly trained labor force even more efficient.
•
Human capacities accumulation, physical capital accumulation, and
technology thus all contribute in a synergistic process to increase the
productivity of the labor force. Greater productivity means the possibility of
higher wages for labor and an easier workplace environment, both of which
contribute to the potential well-being of the population.
•
Stress will be placed again and again on the essential complementarity of
human and physical capital accumulation and the urgency for lessdeveloped nations not only to tap into the existing pool of knowledge
available at the world level but also develop over time an autonomous
technological capacity based on indigenous labor skills
5) Undertaking essential institutional change.
Economic growth and development require fundamental institutional change.
New organizations such as banks, stock and bond exchanges, and insurance
companies gain added importance as an economy modernizes.
•
The role of the central government—the state—must change to incubate
private initiatives, and sometimes to fill gaps when the private sector lacks
initiative. Physical infrastructure such as roads, ports, communications,
the provision of electricity, water, and other essential services must be
improved, and the state typically must play a central role in these areas,
particularly during early stages of structural transformation.
•
The specific nature of the legal system and of property rights; the rules and
regulations governing the emerging financial system; the creation and
operation of a civil service sys- tem; determining what will be taught in the
schools and how success will be measured and so on all must be worked
out and codified by government.
QUESTION 10
Potential internal barriers to development: Some examples of possible internal
barriers that may block fundamental structural change and thus thwart economic
growth and development are:
a) inequalities in the existing distributions of income and wealth, including
the distribution of land ownership. For most countries, the wealth distribution
is intimately related to the nature and power of class relations in society and
to control over economic resources and the political sphere;
b) the level and efficiency of physical infrastructure (roads, electricity, water,
communication services, port facilities, and so on);
c) the role and level of development of organized banking and lending
activities and of equity
(stock) and other financial markets and financial intermediaries;
d) an ineffective or underdeveloped educational system, including low levels
of general literacy and an imbalance between allocations of financing to
primary, secondary, and higher education;
e) prevailing ideological concepts and their impact on thinking and behavior,
including the influence of religious thinking, the accepted role of women and
ethnic or religious minorities, the prevailing economic orthodoxy, and so on;
f)
the initial endowment of natural resources of a nation;
g) the role of the state, that is, the power and nature of the influence of the
central government, including the degree of political freedom and the strength
of democratic processes (included here is the macroeconomic environment
that government at least partially controls, including the nature and definition
of property rights and the functioning of the legal system);
h) the extent and importance of political corruption and patronage and the
impact of these on public policies and on economic behavior of those
governed;
i) the existence of substantial “market failures” such that market signals are
not fully, completely, or accurately transmitted to economic agents, thus
distorting resource allocation, production decisions, and spending patterns;
j) geographic characteristics, for example, land-locked nations, mountainous
terrain, extensive deserts, and even small country size;
k)
diseases specific to certain locations;
l)
civil war, and so on.
Potential external barriers to development: Examples of possible external barriers to
development include:
a)
transnational corporations that control national resources;
b) the international division of labor and the prevailing patterns of
international trade (e.g. primary commodity exporting countries versus
manufactured-goods exporting countries), including the operation of the
organized institutional structure of the international trade system, the effects
of the World Trade Organization’s negotiations and of regional trade blocs,
such as the European Union (EU) or the North American Free Trade
Agreement (NAFTA);
c) the functioning of international financial institutions, including not only the
international private commercial banks but also the World Bank and the
International Monetary Fund (IMF);
d) the influence of the geopolitical and strategic interests of larger
economic powers vis-à-vis
smaller and weaker economic entities;
e) the impact of economic policies of more developed nations on interest
rates, for example, or on tariffs or non-tariff barriers on the global economic
system;
f)
external debt;
g)
the availability of foreign aid and investment, and so on.
QUESTION 11
“The poor are also more likely to have many kinds of health problems, including infant
mortality, earlier adulthood mortality, and mental illness, and they are also more likely to
receive inadequate medical care
Explain why poor children are more likely to develop health problems?
“The poor are also more likely to have many kinds of health problems, including
infant mortality, earlier adulthood mortality, and mental illness, and they are also
more likely to receive inadequate medical care. Poor children are more likely to
have inadequate nutrition and, partly for this reason, to suffer health, behavioural,
and cognitive problems. These problems in turn impair their ability to do well in
school and land stable employment as adults, helping to ensure that poverty will
persist across generations. Many poor people are uninsured or underinsured, at
least until the US health-care reform legislation of 2010 takes full effect a few
years from now, and many have to visit health clinics that are overcrowded and
understaffed”.
QUESTION 12
Explain some socio-economic development challenges facing South Africa and include
the solution for each problem.
➢ High unemployment and low incomes. This is at the heart of many of the
socio-economic development challenges. Problems resulting from this
include crime, hopelessness, a state of inequality, and the poverty cycle.
Solution? Government is trying to tackle this by addressing the issue of a
reasonable minimum wage. They are also looking to advance small business
start-ups to create jobs. Corporates can get involved with Enterprise
Development programmes. Individual entrepreneurs can also help with job
creation.
➢ A breakdown in the nuclear family. Together with the unemployment issue,
this leads to many social ills. High divorce rates and absent parents
amount to a lack of guidance and values instilled in young people. This has
a ripple effect and adds to the other issues such as teenage parenthood
and substance abuse.
Solution? There is no quick fix for relational issues and the lack of a moral
compass. Every moral citizen can help by standing up for what is right and
coaching other members of the community. Corporates can offer mentorships
and guidance counselling. These work well as an integral part of Corporate Social
Responsibility programmes. Do you know any organisation which has a proven
track record of instilling moral values in communities? Support them.
➢ High crime rate. A tough economic climate leads to theft, violent crime and
an anarchy mindset.
Solution? There are so many ways to get involved. Tackling the unemployment
problem is the best start. There are also community policing forums doing good
work at a neighbourhood level. Corporates should seek to build good, supportive
relationships with local law enforcement.
➢ Poor standards of education. This makes it hard for school leavers to
become productive in the economy. South Africa invests a large budget
into education but the results are lagging behind.
➢ Unsustainable business practises. Some business models have relied too
heavily on limited resources. This jeopardises the future of the company
and its employees.
Solution? Scrutinise and rework your business practices for an emphasis on
sustainability. Corporates can invest in portable skills development. This will
ease the impact of possible retrenchments. Be aware of research and
development into economically and environmentally sustainable business
practises.