Topic: Economic, social and environmental problems in development process

·         Economic problems

·         Socials problems

·         Environment problems

I.Economic problems

1. Inflation:

Definition:

v  Inflation is a rise in the general level of prices of goods and services in an economy over a period of time

v  Inflation also reflects an erosion in the purchasing power of money.

Effects of Inflation

v  General: an increase in the general level of prices implies a decrease in the purchasing power of the currency

v  Negative : cost-push inflation, hoarding, social unrest and revolts( hyperinflation, allocative efficiency, menu costs, business cycles, etc)

v  Inflation can cause consumers and investors to change their speeding habits

v  Inflation slows down economic growth

v  Change the distribution of income

v  Positive: labor market adjustment, room maneuver, Mundell-Tobin effect, instability with deflation, financial market efficiency with deflation.

Causes of Inflation (4reasons):

v  Keynesian view: proposes change in money supply do not directly effect prices, visible inflation. Three major types of inflation:

o   Demand-pull inflation: is caused by increases in aggregate demand due to increased private and government spending, etc

o   Cost-push inflation: is caused by a drop in aggregate supply

o   Built-in inflation: is induced by adaptive expectations.

v  Monetarist view: emphasizes the role of government in the controlling the amount of money in circulation (more money in circulation effect to inflation)

v  Unemployment : the Phillips curve is historical inverse relationship between the rate of unemployment and the rate of inflation in an economic

v  Rational expectations theory: is a hypothesis in economics which states that agents' predictions of the future value of economically relevant variables

Controlling Inflation:

v  Tighten fiscal policy-monetary targeting macroeconomic stability, inflation control

v  Sustainable development of the business through measures to improve

v  Competitiveness of       enterprises, actively implement the risk management measures, to promote the training of human resources and work plans newspaper market

v  Improve the efficiency of capital investment, structural adjustment, investment, avoiding widespread investment, overlapping on the project

v  Continue to strengthen legislation, compliance, and ensuring effective law enforcement contribute to the promotion of business, market mechanisms

v  Provide targeted tax cuts for middle and lower income families. There needs to be some wealth re-distribution in order to build a healthier economy

v  Cost-of living allowance

Inflation in Vietnam

l  Inflation has been a persistent problem for Vietnam

l  Food price is leading inflation in Vietnam

l  In 2010: 11.1%

2. Deflation

v  In economics, contrast to inflation, deflation is a decrease in the general price level of goods and services.

v  Occurs when the inflation rate falls below 0%.

v  Increases the real value of money.

v  lead to a deflationary spiral.

v  Historically not all episodes of deflation correspond with periods of poor economic growth.

3. Global crisis:

v  Is an event that impacts the world as a whole, be it the human-race, civilization, or something more cataclysmic.

v  Global crisis including many difficult problems:

Ø  Global financial crisis

Ø  Global energy crisis

Ø  Bankruptcy

Ø  …

v  Thus, global economic crisis is a big problem can not solve thoroughly.

4. Huge external debt:

Definition

v  External debt is:

•          Part of the total debt

•          Is owed to creditors outside the country

•          Include Government debt and Private debt

v  Government debt: debt owed by central Government

v  Private debt: debt owed by corporations or private households

Benefits

v  Improving welfare

v  Source of economic growth and stability

v  Providing liquidity services

v  Smoothing consumption

Effects of Debt Problem

v  For individual households, firms and Government

·         Bankruptcy and financial ruin

·         Weakening the ability to deliver essential services to citizens

v  For the economy

·         Affect economic growth rates

·         Devalue currency

·         Destroy citizens’ savings

·         Increase the cost of imported goods

·         Source of financial crises

Solutions for Debt problem:

v  Increasing saving

v  Developing an export economy

v  Cutting in  Government expenditures

v  Increasing tax (not recommended)

v  Keeping debt below estimated thresholds

·         Placing an embargo on further acquisition of external finance

·         Seeking external loans only for high priority, self-liquidating projects

·         Avoiding short term financing if floating interest rate are involve

5. Tariffs

Definition of tariffs

v  Tariff is:

•          A tax or duty

•          Placed on an imported good

•          By a domestic government

v  Tariff rates: different for every goods

v  Do not apply to domestically produced goods

Why Tariffs are imposed?

v  To protect infant domestic industries

v  To protect consumers

v  To protect domestic producers from dumping

v  To protect domestic employment

v  National security (used by developed countries)

v  Retaliation

Effects of Tariffs

1.       Impact to the country imposing tariffs

   Positive Impacts

v  Increasing Government revenues

v  Increasing domestic production

v  Increasing consumer spending

Negative Impacts

v   Reducing economic growth

v  Reducing competition

v  Increasing prices

v  Other countries might put tariffs on our goods in retaliation

2.       Impact to the economy of a country with tariffs imposed on it

·         Foreign tariffs raise the costs of domestic producers

=> Sell less in foreign market

·         Increase unemployment

Þ      Decrease demand for consumer products

Þ      Impact other industries

·         Causing a decline in the economic health

6. Income inequality

Definition

l  Income inequality is a term that is used to describe an uneven distribution of wealth within a defined geographic area.

Causes of income inequality

l  Educational inequality

l   Science and technology inequality

l   The more hours invested in work increase the income and add to the statistics of the upper level population

 Why income inequality matter

   The degree of inequality plus the level of income determines the extent of poverty

II. Social problems:

1.       Poverty

Definition

l  Poverty is the state of one who lacks a certain amount of material possessions or money

l  Poverty usually means having a very low standard of living

Causes of poverty

l  Overpopulation

      Having large numbers of people with too few resources and too little space

l  Global Distribution of Resource

     Unequal distribution of resources in the world economy

l  High Standards of Living and Costs of Living

l   Inadequate Education and Employment

    Governments of developing countries often cannot afford to provide for good public schools, especially in rural areas

l   Environmental Degradation

    Environmental problems have led to shortages of   food, clean water, materials for shelter, and other essential resources

l  Economic and Demographic Trends

l  Individual Responsibility and Welfare Dependency

Poverty in Vietnam

l  70% of the population live in rural areas earning a daily income of $2 to $3 a day. 

l  Men, women, and children are all affected

Solutions

l  Foreign aid

l  Putting a limit on the number of children a woman can have

l  Changing the roles of women may also help end poverty

2.Population

Situation

l  World population is around 6.7 billion people

l  Each year has increased by about 78 million people

l  Example: China’s population is 1.3 billion people, VN’s population will increase from 86.16 million (2008) to nearly 104 Million in 2030.

Causes

l  Low knowledge

l  Phenomenon of migration

l  Birth plan

l  Poverty

l  Not have policies and measures for the propagation reasonable family planning

Advantages

l  Main recourses to develop economic

l  High demand( big market, large consumption, a abundant of good,…)

l  Abundant labor resources

Disadvantages

l   Life have many difficult

l   Unemployed increase

l   Welfare decrease

l   Population explosion

Challenges

l  Environmental challenges: Air Pollution, water pollution, soil pollution....

¡  1.1 billion people do not have clean water

¡  Every day 5,000 children die from diarrhea due to lack of hygiene standards

l  Social challenges: Population increases, the first challenge is the gap between rich and poor constantly increasing.

l  Population growth will lead to social imbalance.

l  The older population will increase pressure on health systems and pensions

Solution

l  Maintain and increase food production and population size control

l  Improving access to health services including family planning.

l  Stable organization structure

l  Development technology

3.Drug Abuse & HIV

l  Availability: 80% of total opium (heroin) produced in SEA from Myanmar (1997) and exporting throughout borders among SEA countries is easy. HCM, Phnom Penh, Manila are main hubs for global drug distribution

l  In Vietnam, there’re about 180,000 – 200,000 drug users (early 90s), and 50,000+ (35%) was infected with HIV.

l  HIV epidemics: Cambodia, Laos, the Philippines and Indonesia are in the top 4 with highest numbers of HIV infectors (around 2% of the population)

l  Women and children in poor countries like Laos and Cambodia haven’t been taken care of health.

l  The rate of HIV infection in men aged 15-24 and women in countries are generally lower than African countries but is higher than other Asian countries

Solutions

v  Education, schools, awareness, campaigns, choices, advertising

v  Counseling, treatment, advice, confidential, helpline

v  Open communication

v  Close family relationships: brothers, sisters, parents

v  Employment, meaningful activity, activities in evenings

v  Good environment, leisure, sports, friends

III. Environment problems:

1.       Deforestation

Causes

Agri-business activities

Industrial logging

Mining for metals

Road Building

Hydroelectric dams and

Policy

Solutions

•          Reforestation

•          Legislation

•          Wildlife Sanctuaries

•          Cities

•          Incentive to Corporate

•          Commercial Forest Plantations

•          Water Management

2.       Pollution

Types of pollution

•          Air pollution

•          Water pollution

•          Land pollution

•          Noise pollution and

•          …

3.       Loss of Biodiversity

Causes

•          Climate change

•          Invasive species

•          Overexploitation

•          Land pollution

Solutions

•          Protected areas

•          Market tools

•          Strong institutions

•          Informing all of society

•          Etc

Climate Change

v  The effects

•          Impact on human health and quality of life by many ways.

•          Increase in prevalence of a variety of infectious diseases.

•          Make changes in food and water supplies, indirectly cause increases in a range of adverse health outcomes, including malnutrition, diarrhea, injuries, cardiovascular and respiratory diseases, and water-borne and insect-transmitted diseases.

v  Solutions

•          Create Energy conservation

•          Find Renewable energy

•          Manage carbon sequestration