CURRENT DEVELOPMENTS

Factors Affecting Economic Development.

Inflation

Inflation affects both consumers and producers in the market, and poses a threat to the market

stability. Throughout history, inflation has played a major role in the economy of nations. For

example, after World War I, the German government printed a vast amount of money, which

gave rise to major inflation in the economy of Germany. When people had money, but scarcity of

products, the price of the products went sky high, as the value of money had gone down. Having

plenty of money made the price go so high that people had to pay a large amount of money to by

a simple loaf of bread. Currently, many nations of the world are facing similar financial crisis

and economic downward trend, giving rise to a credit crunch.

When inflation affects the economy of a nation, you have to pay more money to maintain the

same standards of living, and to purchase the same amount of goods and services, due to a rise in

prices.

Interest Rates

Interest rates can have a major impact on the growth of economy, especially for industries such

as real estate, automobiles, and cruise companies. A larger interest rate would discourage

customers from burrowing money and purchasing these products or services. It also discourages

companies form making expansions, investing in new areas, making new capital investments,

and starting new businesses.

Value of the Currency

The value of the U.S dollar compared to other foreign currencies is important for all businesses,

even if they do not engage in import or export with other countries. Just like people and

businesses, the Government of the United States also has loans and must pay interest on them.

The United States often prints more money than it actually has, to give the economy a boost.

This can lower the value of the dollar. A customer can choose to buy goods and services that

originated in the United States, or any other country. If the U.S dollar has more value, or

purchasing power, the companies that are reliant and heavily depend on other countries for its

inputs, such as raw materials or processing goods, can be more competitive in the market.

Environmental Impacts

Environmental impacts have a profound effect on the growth of an industry in today�s economy.

It is not only the environmental effects, but also the perception of the general public that impacts

businesses and the economy. For example, the demand for fur coats declined drastically in the

past decade, as consumers became more aware of animal welfare and ecological balance. If the

public perceives that the products or services of an industry as being environmentally unsafe or

harmful, most companies within the sector will experience a decline in sales.

Government Intervention

Many industries are monitored and regulated by government agencies such as the

Environmental Protection Agency ( EPA), U.S. Department of Agriculture (USDA), and the

Food and Drug Administration (FDA), to maintain standards of all operators in each industry.

All companies must follow the government safety rules for employees, consumers, the

environment, and natural resources, as per specifications and requirements of these agencies.

Economic development of an industry is also influenced by the confidence of general people on

the industry, the economic state of a nation, and involvement of government in the industry. The

real development cannot be achieved by depleting environment, or at the cost of our health,

which can in the long run, backfire on us, and lead to economic and social disasters, creating

negative impacts for general population around the globe.

Informal Credit Markets.

Many developing countries, despite double digit growth rates, have lagged far behind in terms of

quality of living in urban areas. Problems of unemployment, inadequate housing, poor

environmental quality, rampant crime, poverty, transportation etc. have plagued urban residents

and decision makers alike. While the attempts of governmental agencies have been

commendable, shear scale of the problem has diluted such efforts, resulting in the benefits being

spread thinly among a large population, or not benefiting most of them.

Low income households in developing countries are seen as particularly vulnerable. Their

personal problems of low education and skill levels, low incomes, lack of marketable assets, and

uncertain job markets have been compounded by external factors that have failed to provide

adequate infrastructure and social services that would have enabled them to participate in

mainstream economic activities. As a result, this has affected every facet of their life:

employment (predominantly in the informal sector), education (non-existent or up to primary

levels only), health (low quality or traditional), housing (impermanent materials and illegal

settlements) etc.

Often the problems of low-income households can be traced back to a single factor which, on a

cumulative basis, has affected other factors, resulting in their present condition. For low income

households, one such cumulating factor is credit, or the lack of access to adequate bank credit.

This lack of access has resulted in households turning to informal credit markets (ICMs) to

satisfy their need, where elaborate networks of credit delivery have been set up by different kinds

of informal suppliers. Examples include money lenders, pawn brokers, ROSCAs, credit

societies/unions etc.

With governmental action in ensuring an enabling policy/programme environment not

forthcoming or insufficient, particularly with innovative financing mechanisms, there is a need to

understand the systems of credit delivery that the low-income households themselves have

established to fill the gap. This financial dualism of "formal" and "informal" is a result of both

the shortcomings of the formal sector and the intrinsic condition and position of the urban low

income households themselves [Germidis et al., 1991]. Delivery of credit for various purposes

should be ensured not only by increased financial services of banks and other financial

institutions, but more importantly, by also taking into account the existing systems of credit

delivery already in place in the settlements. This calls for a better understanding of the systems

of credit developed by the urban low income households, the advantages it offers, and

implications of such systems for devising appropriate microcredit programmes for their needs.

The material presented in this paper is part of a larger survey of low-income households and

informal credit suppliers carried out in AprilCJune 1995 in Bangalore, India [Srinivas, 1996].

Information gleaned from interviews with settlements leaders, NGOs, traders and shopkeepers,

social workers etc. was also used to substantiate the data collected. The ICM is vast, covering

different types of suppliers providing credit for different purposes. However, the survey was

limited to credit activities that were taking place within a settlement or community that serviced

low-income households.

What is Informal Credit?

The line dividing "informal" credit and "formal" credit is very fine, and credit suppliers on both

sides actually form a continuum that range from very informal suppliers (like friends, relatives

neighbours etc.) to fully formal suppliers (banks and specialized financial institutions). Ranged

in between these extremes are rotating savings and credit associations (ROSCAs), money

lenders, pawn brokers, credit societies, traders etc. [Srinivas and Higuchi, 1996]. They mobilize

savings and provide credit, or as in the case of ROSCAs, do both. The ICM is highly

heterogenous in nature. It encompasses short term flows in funds markets, lending and

borrowing of small amounts among group members, friends or relatives. It includes activities of

finance companies, as well as those of pawnshops and money lenders. It runs the gamut from

large wholesale traders financing trade, to village level crop buyers, to petty shopkeepers and

itinerant peddlers. It also includes organized credit unions, ROSCAs (called 'chit funds' in

southern India), credit societies etc. With advantages of unregulated money supply, easy

accessibility, easy liquidity, low 'administrative' and procedural costs, little or no

collateral/mortgage requirements, flexibility in interest rates and repayment schedules, ICMs are

ideally suited to cater to the lower income groups [ADB, 1990].

Three types of informal credit suppliers can be observed in the ICM. The "transactional" credit

suppliers those for whom credit is a business transaction. Examples include, pawn brokers,

money lenders, traders, employers etc. The "mutual" credit suppliersCthose for whom credit

supply is a give and take process. Examples include, chit funds/ROSCAs, credit unions, credit

societies, people's organizations/self help groups. The "personal" credit suppliers those for whom

credit supply is a private arrangement that may be reciprocated in the future. Examples include

friends, relatives, co workers and neighbours [Srinivas and Igel, 1995]. Ranged along with

formal commercial banks and financial institutions, transactional, mutual and personal suppliers

would form a continuum. This would enable the positioning of 'fully informal' personal suppliers

and the 'fully formal' banks at either end of the continuum, with the 'semi-formal' and 'semi-

informal' transactional and mutual suppliers in between [Srinivas and Higuchi, 1996]. (While the

definition of an NGO is broad and covers a range of organizations and institutions, it was not

included here since it was observed that NGOs primarily function as catalysts, intermediaries and

facilitators - aiming for a greater degree of community managed microcredit programmes).

A common thread that runs through all of them is their informality, adaptability and flexibility of

operations features that reduce their transaction costs and confers upon them their comparative

advantage [Ghate, 1990]. The following aspects characterize the ICM:

- Scale of operations is small, because lending is primarily based on personal knowledge of

the borrower. Loans are small, repaid quickly, and are largely unsecured.

- Individual lenders operate in a sp

- ecialized and circumscribed area, or in a specific niche of the market.

- Due to the small scale of operations, intra agency problems typical of large organizations

like banks are not seen in the ICM.

- Suppliers function outside the purview of regulations imposed in the formal sector in

respect of capital, reserve and liquidity requirements, ceilings on lending and deposit

rates, mandatory credit targets, audit and reporting requirements and so on.

If the features of ICMs mentioned above are taken into account, then an informal credit operation

can be operationally defined as one that is not regulated/audited by the Federal or Central Bank,

has flexible repayment schedules (in terms of periods and amounts), flexible interest rates, and

demand little or no collateral. Several other criteria, such as decision making processes,

proprietorship or area of operation, can be included to adopt the definition to specific local

conditions. This is also important due to the vast variation in ICMs seen across the countries in

the developing world [Srinivas and Igel, 1996].

Credit Demand and Supply in the Informal Sector

Stringent requirements for loans have systematically kept low income households out of the

credit delivery network of commercial banks. Bank managers interviewed during field research

revealed that banks required borrowers to have a job in the formal sector, with "steady"

employment and an incomes at "adequate" levels, whereas most of the households surveyed had

informal sector jobs (83.7 percent) or transient jobs in construction sites. This kept their incomes

very irregular and uncertain. Banks required that only borrowers with valid land ownership or

ownership certificates were to be eligible for loans but most of the low income households lived

as squatters and did not own the land (100 percent of the sample). Banks requested collateral for

loans, usually in the form of marketable assets, for example, the house to be built or the land

itself. Mean household income of the samples studied was about Rs. 1000 per month (Rs. 40 =

US$ 1, 1991). They owned very few assets, and their savings by themselves was insufficient to

act as collateral. Most bank loans were large, for lump-sum/one-time investments, whereas the

surveyed households usually staggered expenditures over a period of five to eight years.

Such conditions invariably led urban low income households to depend on ICMs to satisfy their

credit needs. In the informal sector, income levels, land ownership and job status were not

important for obtaining loans from the ICM. Loans were made on a face to face basis with

personal knowledge and close proximity of the lenders and borrowers. Practically no collateral

was demanded during such transactions (except, of course, in the case of pawn brokers, who lent

amounts based on the value of items pawned by the borrower). Close acquaintance between the

lender and borrower also ensured that loans were available quickly without any need for

elaborate paperwork and costing little in terms of administration and information. Most of the

loans were small, to finance only a particular part or fraction of the overall investment process.

Expenditures were staggered and spread over a long period of time (from five to eight years) so

that burdens of immediate loan repayment or interest payments were low and repaid quickly (less

than eight weeks). By providing loans of small size (Rs. 2,000 to Rs.5,000), informal suppliers

satisfied their credit needs. Besides, the long held belief of usurious practices in ICM can be put

to question since, despite "high interest rates" on an annual basis, actual interest payment

burdens are low, since loans are small in size and are repaid in a very short period.

Informal suppliers interviewed in the study did not receive any support from the government or

financial institutions. They used their own resources and profits generated by increased

circulation of loan funds (for money lenders, pawn brokers, employers) or used the savings of

group members to lend (ROSCAs, credit societies etc.). Since their funds were not insured or

were not secured by collateral in any way, risk of default was high. But close links and personal

relationships were maintained between borrower and lender. This meant that there were few

defaulting borrowers observed in the study (less than 2.3 percent of borrowers).

Dispensing with the elaborate requirements and paperwork of conventional banking, informal

suppliers have devised their own methodologies which have worked to suit the conditions and

positions of its low income clientele. Small scales of operation mean that informal suppliers

function without the inter and intra agency support typical of formal financial institutions.

However, a fundamental disadvantage of informal credit observed was that large capital

investments or other such lump-sum investments were difficult to be made, affecting as a result,

expansion of production, higher income generation or quality/quantity improvement.

Development Index.

The DI was created to emphasize that people and their capabilities should be the ultimate criteria

for assessing the development of a country, not economic growth alone. The DI can also be used

to question national policy choices, asking how two countries with the same level of GNI per

capita can end up with different human development outcomes. These contrasts can stimulate

debate about government policy priorities.

The Development Index (DI) is a summary measure of average achievement in key dimensions

of human development: a long and healthy life, being knowledgeable and have a decent standard

of living. The DI is the geometric mean of normalized indices for each of the three dimensions.

The health dimension is assessed by life expectancy at birth, the education dimension is

measured by mean of years of schooling for adults aged 25 years and more and expected years of

schooling for children of school entering age. The standard of living dimension is measured by

gross national income per capita. The DI uses the logarithm of income, to reflect the diminishing

importance of income with increasing GNI. The scores for the three DI dimension indices are

then aggregated into a composite index using geometric mean. Refer to Technical notes for more

details.

The DI simplifies and captures only part of what human development entails. It does not reflect

on inequalities, poverty, human security, empowerment, etc. The HDRO offers the other

composite indices as broader proxy on some of the key issues of human development, inequality,

gender disparity and human poverty.

A fuller picture of a country's level of human development requires analysis of other indicators

and information presented in the statistical annex of the report.

Growth of Market Structures.

An increase in the demand for a particular product or service over time. growth of market can

be slow if consumers do not adopt a high demand or rapid if consumers find the product or

service useful for the price level. For example, a new technology might only be marketable to a

small set of consumers, but as the price of the technology decreases and its usefulness in

everyday life increases, more consumers could increase demand

Voting Behaviour.

The most interesting questions about an election are not concerned with who won but with why

people voted the way that they did or what the implications of the results are. These questions are

not always easily answered. Looking only at the campaign events and incidents will not suffice.

The unique aspects of the election must be blended with a more general understanding of

electoral behavior to create a full explanation. We thus need to discuss basic concepts and ideas

used in the study of voting behavior as a basis for analyzing the 2012 results.

Two major concerns characterize the study of electoral behavior. One concern is with explaining

the election result by identifying the sources of individual voting behavior. We attempt to

understand the election outcome by understanding how and why the voters made up their minds.

Another major concern in voting research emphasizes changes in voting patterns over time,

usually with an attempt to determine what the election results tell us about the direction in which

American politics is moving. In this case we focus on the dynamics of electoral behavior,

especially in terms of present and future developments. These two concerns are complementary,

but they do emphasize different sets of research questions. For our purposes, these two concerns

provide a useful basis for discussing key aspects of voting behavior.

Sources of Individual Voting Behavior

On what basis do voters decide how they will cast their ballot? Several basic factors can be

identified as reasons for choosing a candidate in an presidential election. A voter may choose a

candidate on the basis of one or more of the following considerations:

- Orientations on public policy issues

- Evaluations of government performance

- Evaluations of candidate characteristics

When voters are asked what they like or dislike about a specific candidate � such as what might

make them vote for or against that candidate � most of their responses fall into one of the above

three categories.

These orientations and evaluations in turn are influenced by two more general attitudinal factors:

- Party identification

- General ideological dispositions

Party identification and ideology are more general, long-run factors that influence voting

behavior primarily by affecting the attitudes that are more immediate to the vote decision in a

particular year.

The various factors that influence the vote decision vary in their stability over time. Evaluations

of candidate qualities and government performance are distinctly short-term forces, capable of

substantial shifts from one election to the next. Party identification and ideology are much more

stable in the short term. Not many voters change their party identification or ideology from one

election to the next, and the changes that do occur often are small ones. Issue orientations fall in

between. While the specific issues crucial in presidential elections can change dramatically, as

can how the voters evaluate the presidential candidates on the issues, many basic policy

questions (e.g., defense spending, social welfare programs, abortion) stretch across several

elections, with partisan differences remaining relatively constant.

The various attitudes and orientations that influence voting behavior in presidential elections are

interrelated. Understanding the interrelationships among attitudes and orientations is important

for a full understanding of voting behavior.

The attitudes and orientations that affect voting behavior are related to a number of social and

demographic characteristics. Thus, social groups differ in their voting patterns. Some of these

differences have existed for decades, but others represent more recent developments. The most

important social and demographic factors in recent elections have been:

- Race and ethnicity. Minority groups, especially Blacks, are more Democratic in their

voting than are Whites.

- Social class or socio-economic status. Those who are better off in income or socio-

economic status are more Republican than are those who are worse off.

- Religion. Those who are more religious are more Republican than those who are less

religious. In the past, White Catholics and Protestants differed considerably in their

voting, but that distinction has declined in significance.

- Region. Voters in the South, Great Plains, and Rocky Mountains regions are more

Republican, while those in the Northeast and on the Pacific Coast are more Democratic.

- Gender. Women are more Democratic than are men.

- Marital status. Married individuals are more Republican than are single individuals.

- Age. Younger voters are more Democratic than are older voters.

Technology Transfer.

Technology transfer, also called transfer of technology (TOT), is the process of transferring

skills, knowledge, technologies, methods of manufacturing, samples of manufacturing and

facilities among governments or universities and other institutions to ensure that scientific and

technological developments are accessible to a wider range of users who can then further

develop and exploit the technology into new products, processes, applications, materials or

services. It is closely related to (and may arguably be considered a subset of) knowledge transfer.

Horizontal transfer is the movement of technologies from one area to another. At present transfer

of technology (TOT) is primarily horizontal. Vertical transfer occurs when technologies are

moved from applied research centers to research and development departments.

Technology transfer is promoted at conferences organized by such groups as the Ewing Marion

Kauffman Foundation and the Association of University Technology Managers, and at

"challenge" competitions by organizations such as the Center for Advancing Innovation in

Maryland. Local venture capital organizations such as the Mid-Atlantic Venture Association

(MAVA) also sponsor conferences at which investors assess the potential for commercialization

of technology.

Transfer Process

Many companies, universities and governmental organizations now have an Office of

Technology Transfer (TTO, also known as "Tech Transfer" or "TechXfer") dedicated to

identifying research which has potential commercial interest and strategies for how to exploit it.

For instance, a research result may be of scientific and commercial interest, but patents are

normally only issued for practical processes, and so someone�not necessarily the researchers�

must come up with a specific practical process. Another consideration is commercial value; for

example, while there are many ways to accomplish nuclear fusion, the ones of commercial value

are those that generate more energy than they require to operate.

The process to commercially exploit research varies widely. It can involve licensing agreements

or setting up joint ventures and partnerships to share both the risks and rewards of bringing new

technologies to market. Other corporate vehicles, e.g. spin-outs, are used where the host

organization does not have the necessary will, resources or skills to develop a new technology.

Often these approaches are associated with raising of venture capital (VC) as a means of funding

the development process, a practice more common in the United States than in the European

Union, which has a more conservative approach to VC funding. Research spin-off companies are

a popular vehicle of commercialisation in Canada, where the rate of licensing of Canadian

university research remains far below that of the US.Technology transfer offices

may work on behalf of research institutions, governments and even

large multinationals. Where start-ups and spin-outs are the clients, commercial fees are

sometimes waived in lieu of an equity stake in the business. As a result of the potential

complexity of the technology transfer process, technology transfer organizations are often

multidisciplinary, including economists, engineers, lawyers, marketers and scientists. The

dynamics of the technology transfer process has attracted attention in its own right, and there are

several dedicated societies and journals.

There has been a marked increase in technology transfer intermediaries specialized in their field

since 1980, stimulated in large part by the Bayh-Dole Act and equivalent legislation in other

countries, which provided additional incentives for research exploitation.

Democracy and Development.

The causal link between democracy and development is a controversial issue. For most of the

twentieth century, conventional wisdom has held that autocracies are better able to marshal the

resources necessary to promote economic development than are democracies, and that a certain

level of economic development is necessary for democracy to take hold and flourish in a country.

That view deserves a new examination in the post-Cold War world. Morton H. Halperin, Joseph

Siegle, and Michael Weinstein make such an examination in their upcoming book on the subject,

and their results present some interesting implications.

When the countries of the world are examined as a whole, democracies do perform better in

terms of economic development than do autocracies or mixed polities. The debate concerns

developing countries � specifically, can democracies develop as low income countries; can poor

countries democratize; and does democracy among low income countries make any difference

for their development success?

According to data collected and analyzed for the book, there has been no advantage for

autocracies over democracies for the past 40 years in terms of development. Both developing

country democracies and non-democracies have grown at approximately 1.5% of GDP per capita

per year during that time. When East Asia is removed from that sample, democracies have

actually performed better � growing at 0.5% per capita per year faster than autocracies and

mixed polities. What is more, there is no data on about 25% of autocracies � countries such as

North Korea, Iraq, Afghanistan (for most of its rule), and Cuba � so actual growth figures for

autocracies would likely be substantially lower if the performance of these additional countries

were included.

More than simply growing at a faster rate, democracies have outperformed autocracies in the

consistency of their growth. An analysis of the 80 worst economic performers of the last 40 years

reveals that all but three have been autocracies. In addition, democracies have performed

substantially better than autocracies in the social welfare dimension of development (life

expectancy, child mortality, literacy, etc.) � in some cases up to 50% better.

It is important to note that there has been a variety of development experiences among

democracies. This can be attributed to the differing success with which any country can develop

institutions of accountability � checks on the chief executive, separation of politics from the civil

service, independence of the judiciary, freedom of the press, and independence of the private

sector, for example � which are the foundations of democratic systems of governance. Both

autocracies and democracies that have developed these institutions have had better rates of

economic development than countries without well established institutions of accountability. For

this reason, there are some autocracies that have performed better than some democracies; the

East Asian "tigers" fall into this category.

Despite the overall positive performance of democracies over autocracies in development, there

has been no preference given to democracies over the past 40 years in the dispersal of

development assistance. The same has been true with debt relief, even though new democracies �

countries that have recently transitioned from autocratic rule � have often inherited debt that is as

high as 23% of GDP, a figure higher than that for most low income countries. This problem is

compounded by the fact that the lack of a "democracy dividend" can undercut popular support

for democracy. Indeed, 70% of countries which experienced democratic backtracking over the

past 20 years faced periods of economic stagnancy before backsliding.

Environmental Concerns.

1. Air Pollution: Pollution of air, water and soil take a huge number of years to recover. Industry

and engine vehicle fumes are the most obvious toxins. Substantial metals, nitrates and plastic are

poisons in charge of pollution. While water contamination is brought about by oil slicks, acid

rain, and urban sprawl; air contamination is created by different gasses and poisons discharged

by businesses and manufacturing plants and burning of fossil fills; soil contamination is majorly

created by mechanical waste that takes supplements out of the soil.

2. Water Pollution: Clean drinking water is turning into an uncommon thing. Water is turning

into a monetary and political concern as the human populace battles for this need. Waste from

industrial and agricultural activities pollute the water that is used by humans, animals and plants.

3: Soil and Land Pollution: Land pollution simply means degradation of earth�s surface as a

result of human activities like mining, littering, deforestation, industrial, construction and

agricultural activities. Land pollution can have huge environmental impact in the form of air

pollution and soil pollution which in turn can have adverse effect on human health.

4. Climate Change: Climate change is yet another environmental concern that has surfaced in

last couple of decades. Environmental change has different destructive impacts that include, but

are not limited to, the melting of polar ice, change in seasons, new sicknesses, and change in

general climate situation.

5. Global Warming: Environmental asset abuse is also an important environmental concern.

Fossil fuel utilization brings about discharge of greenhouse gasses, which causes environmental

change. However, individuals are taking endeavors to move to renewable energy sources.

6. Deforestation: Our woodlands create new oxygen and additionally help in managing

temperature and precipitation. At present, timberlands cover 30% of the area, but wooded areas

are being lost on a regular basis because people are looking for homes, food, and materials.

Deforestation is a huge problem and will just continue to get worse.

7. Increased Carbon Footprint: Temperature increases, like climate change, are the

consequence of human practices, including the use of greenhouse gasses. When the atmosphere

changes and the heat increases, it can cause a number of problems and start to destroy the world

we live in.

8. Genetic Modification: Genetic modification utilizing biotechnology is called genetic

engineering. Genetic engineering of food brings about expanded poisons and sicknesses as

qualities from a hypersensitive plant can exchange to target plant. Some of these crops can even

be a threat to the world around us, as animals start to ingest the unnatural chemicals and such.

9. Effect on Marine Life: The amount of carbon in the water and the atmosphere is continuing

to be a problem in the world around us. The primary effect is on shellfish and microscopic fish,

and it has similar effects to osteoporosis in humans.

10. Public Health Issues: The current environmental concerns represent a considerable measure

of danger to well-being of people, and creatures. Dirty water is the greatest well-being danger of

the world and poses a risk to the health and lifespan of people and animals.

11. Overpopulation: The number of inhabitants in the planet is arriving at unsustainable

levelsas it confronts deficiency of assets like water, fuel and food. Overpopulation is one of the

most important environmental concerns.

12: Loss of Biodiversity: Biodiversity is yet another casualty due to the impact of human beings

on the environment. It is the result of 3.5 billion years of evolution. Habitat destruction is a major

cause for biodiversity loss. Habitat loss is caused by deforestation, overpopulation, pollution and

global warming.