◄Unit 6: How to manage moneyUnit 8: International financial institutions, cooperation and development►

Unit 7: Transport, employment, unemployment and their impacton the economy

  • Unit 7: Transport, employment, unemployment and their impacton the economy

    TOPIC 2 Sustainable Development: Wealth Creation

    Key unit competence: To be able to analyse the contribution of transport and employment to the economic development

    Activity

    1. Explain the advantages and disadvantages of the different types of transport.

    2. Discuss the importance of transport to an economy.

    3. Identify the causes of unemployment.

    7.1 Contribution of transport to economic development


    Activi
    ty 1
    Discuss and answer the following questions.

    1. Define the following terms:
        a) Transport
        b) Transport infrastructure

    2. Identify the relationship between the two terms in question (1) above.

    3. Examine major challenges facing the transport sector in Rwanda and her neighbouring countries in Eastern and Central Africa.

    4. Some of the transport infrastructure in Eastern and Central Africa was developed by the colonialists. To what extent have these developments helped or caused problems in transportation of goods from one country to another?

    Transport means to carry or move people and goods from one place to another. Transport infrastructure refers to the framework that supports transport, for example, roads, railway lines, ports, canals, airports and pipelines. From the early civilisations to the present day, transport has contributed significantly to economic development in world societies. Realising that transport is crucial in facilitating economic development, humankind has had to continuously improve transport infrastructure. Th e use of modern technology in improving transport infrastructure has significantly contributed to economic development in the world.

    Activity 2
    Discuss and provide answers to the following questions.

    1. 'The state of your country’s economic development is a reflection of the status of the existing transport infrastructure'. Give detailed examples to support your answers.

    2. Examine ways in which improvement to the current transport infrastructure in Rwanda has contributed to the economic development of our country.

    3. 'Th e acceleration of economic development in Rwanda can be boosted if a railway network linking Kigali and the ports of Mombasa and Dar-es-Salaam is constructed. Give justifications in support of this statement.

    The following are the contributions of transport to economic development.

    1. Transport lowers the average cost of a unit product. The lower the transport cost, the lower the cost of producing a unit of a product. It also lowers the cost of doing business in an economy.

    2. Quality transportation results in quick delivery of products to the market. Th is facilitates internal and external trade and contributes significantly to industrial development.

    3. Transport contributes to the general growth of industries through increased production of different products.

    4. Improved transport network systems increase competition among business enterprises producing similar products or offering similar services. As a result, goods and services are available to consumers cheaply and the welfare of citizens in a country is improved.

    5. Provision of modern transport infrastructure enables corporations to enjoy the economies of large-scale production. Corporations are likely to specialise in production of specific goods and services in a market.

    6. Improved transport infrastructure results in the agglomeration of businesses. This means businesses are likely to be located close to one another. Industries or businesses located in the same area have access to power, water, transport and labour.

    7. Good transport attracts direct foreign investment. More foreign industries will be set up because of improved transport infrastructure and this accelerates economic development.

                              

    Activity 3
    1. Analyse how transport contributes to the economic development of our country.
    2. Discuss ways in which transport contributes to globalisation in the world.

    7.2 Impact of employment on the economy locally, nationally and globally

    Activity 1
    1. Carry out a survey on employment in your district. Explain the different forms of employment activities carried out by people.
    2. Identify the benefits of employment to the people in your district.

    Employment refers to the engagement of human resources (labour) in the production of goods and services in an economy. Workforce or labour force refers to the working population usually between the ages of 18 and 65 years. Employment of labour is categorised into two, namely:

    Paid employment: Th is is the state where a person is employed and receives regular income in the form of wages or a salary.

    Self-employment: This is the state where a person runs a business with the intention of making a profit or a person who works for himself or herself.

    Employment of labour, whether paid or self-employed, is regarded as an avenue of earning income through salary, wages, fees, commissions and profits. Th e following pictures show the different forms of employment that people engage in.


    Activity 2
    Discuss and answer the following questions.
    1. Based on the survey you carried out in Activity 1, which is the most common type of employment in your district?
    2. What is the status of self-employment in Rwanda?
    3. Examine strategies that may improve the level of self-employment in our country.

    7.2.1 Impact of employment on the economy locally

    Some of the benefits of employment to an economy include the following:

    1. Reduction of poverty in the society. Income earned from employment improves people's standards of living.

    2. Investments made by self-employed persons create job opportunities for people in the society. Job opportunities improve the living standards and reduce poverty levels among the people.

    3. Employment increases expenditure on goods and services locally. This stimulates economic activity, creates new job opportunities and facilitates the establishment of new industries through self-employment.

    4. Employment reduces cases of social evils in a society. Unemployed persons are likely to engage in undesirable activities, for example, drug abuse and crime.

    5. Employment improves income distribution and reduces income inequality between the rich and poor people in a society.

    6. Employment promotes education of children and the youth. This is because education improves employment opportunities for parents in the present and for the youth in future by providing employees with income to pay tuition fees for their children.

    7. Employment reduces family and marital conflicts. Lack of economic resources brews social conflicts that lead to increases in separation and divorce cases.

    Activity 3
    1. Discuss any other positive impacts of employment to people in your district.
    2. What is the ratio of the employed and self-employed persons in your district?
    3. Examine what can be done to improve the status of employment in your district.

    7.2.2 Impact of employment on the economy nationally

    The following are some of the social and economic impacts of employment to a nation.

    1. Employment enables individuals in a nation to earn an income. The income earned is spent on goods and services and some is saved for investment purposes. Savings and investment contribute to creation of wealth and increase the financial security of people.

    2. Employment improves income distribution and reduces income inequality in a country. The gap between the rich and the poor is also narrowed.

    3. A high level of employment reduces poverty levels and enhances sustainable development in a country. High levels of poverty lead to destruction of the environment and erode sustainable development.

    4. Employment increases productivity and accelerates the growth of wealth and overall economic development of a nation. The growth of a nation’s economy implies that there is an increase in the production of goods and services to satisfy human needs.

    5. Employment of labour boosts investment opportunities. This results in an increased demand for goods and services in an economy.

    6. Employment results in increased government revenues from taxation. The government uses revenues to improve other sectors of the economy, for example, tourism, transport, education and health.

    7. Employment reduces the undesirable effects of unemployment. Employment reduces crime rates, drug use and abuse among the youth in a nation. Decrease in crime rate results in improved security for the nation.

    Activity 4
    1. Suggest ways in which the government may promote employment of the youthful population.
    2. Discuss other positive impacts of employment on the economy of Rwanda.
    3. Explain how employment reduces poverty and enhances sustainable development in a country.

    7.2.3 Impact of employment on the economy globally

    Employment has social and economic benefits globally. These benefits include the following:

    1. Employment boosts the world output of goods and services. This results in increased exports, imports and provision of a variety of goods and services. International trade boosts the economies of the world nations and ultimately promotes economic development.

    2. Employment leads to technology transfer from one nation to another. Cross border mobility of labour leads to transfer of technology in the production of goods and services.

    3. Due to globalisation and techno-skills transfer, the job market attracts labour from all countries. Th is has resulted in a brain drain from developing nations to developed nations.

    Discuss and answer the following questions.

    Activity 5
    1. Brain drain is a serious problem affecting developing nations. Discuss any five factors that have contributed to brain drain in Africa.

    2. Suggest measures that developing nations can adopt to curb brain drain.

    Employment is based on specialised training and relevant skills, competencies, creativity and innovativeness of workers globally. This has negatively led to huge disparities in earnings from employment in the international job markets.

    Activity 6
    1. Conduct research and explain other roles of employment in the global economy.
    2. Identify ways in which Rwanda has benefited from employment in the global economy.

    7.3 Concept of unemployment


    Activity 1
    1. Who do you define as an unemployed person?
    2. Assess the level of unemployment in Rwanda.

    Unemployment is a situation where people who want to work and are actively searching for jobs, are unable to find work. Unemployment is becoming a serious problem to national governments and the international community. Th e extent of severity on unemployment differs from one country or region to another. In developing countries, unemployment has become a major socio-economic and political challenge.


    7.4 Causes of unemployment


    Activity 1
    1. Examine the major causes of unemployment in Rwanda.
    2. Identify measures the government may put in place to reduce the rise of unemployment in the country.

    The major causes of unemployment in most countries of the world are as follows:

    1.Rapidly growing population:The rate of population growth in a country may be higher than the ability of the economy to generate enough job opportunities for the increasing labour force. Th is causes unemployment, especially among the youth.

    2.The technological revolutions:Superior animated machines, for example, robots and cyber-physical systems are embraced by businesses in the world today. These latest forms of technology are slowly replacing human labour in the production of goods and services.

    3. Cyclical condition of an economy:This has created business cycles of an economic boom and recession. In times of an economic recession, there is lack of demand for goods and services. This causes a number of industries to close down, thus contributing to unemployment.

    4. Rural-urban migration: Educated college or university graduates migrate to urban centres in search of jobs. Because of lack of suitable job opportunities in the urban areas, these migrants worsen the situation of urban unemployment.

    5. Skills mismatch: There is no sufficient link between college and university training curriculums and employers’ perceived employable skills. Th is mismatch has caused a number of graduates in the developing world to be unemployed.

    6. Unfavourable business environments: Unfavourable business environments do not attract foreign direct investments. Therefore, they do not create more job opportunities for people in developing countries.

    7. Insecurity: Prolonged wars, terrorism, internal political strife and power struggles, affect the economy. This is because economic resources are channelled towards maintaining security at the expense of developing the economy.

    7.5 Impact of unemployment on the economy locally, nationally and globally


    7.5.1 Impact of unemployment on the economy locally

    Activity 1
    Identify problems that arise due to unemployment in your district.

    The following are the impact of unemployment locally.

    1. Unemployment has created tension and conflicts among family members, relatives and neighbours. Unemployed persons increase the incidence of poverty and strain of family resources.

    2. Unemployed persons may engage in social evils such as drug use and abuse, crime, prostitution, drug trafficking and human trafficking. This leads to insecurity and rise of social evils.

    3. Unemployment creates social class tension between the rich and the poor. This may lead to conflicts among the social classes in the community.

    4. Unemployment may lead to pessimism among people who invest heavily on education. This may lead to some families denying school going children a chance to get education.

    Activity 2
    Suggest measures that local leaders in your community may adopt to reduce unemployment cases.

    7.5.2 Impact of unemployment on the economy nationally

    Unemployment brings the following social, economic and political impact to a nation.

    1. Most of the unemployed youth move from rural to urban areas in search of jobs. This may increase the levels of urban poverty.
                      

    Activity 3
    What are the possible outcomes of an increase in urban poverty in a country?

    2.Prolonged unemployment makes the unemployed graduates lose talents and the pre-service skills that the national government needs. It is also a waste of scarce human resources.

    3. Unemployed youths usually become a challenge to the national government. They may end up causing riots, sabotaging development programmes or engaging in armed conflicts. Such destructive actions bring political instability and increased insecurity.

    4. Unemployed persons reduce spending and this affects the national economy. This is because there is less demand for goods and services.

    5. High levels of unemployment in a country may lead to an economic recession as witnessed in the USA and Greece. The living standards of people go down, they are barely able to afford quality health care and poverty is experienced.

    6. Unemployment reduces the amount of tax received in a country. The government receives less revenue and a country has to borrow funds to finance its needs.

    7. The GDP in a country reduces due to a high level of unemployment. Thus, there is a decreased demand for goods and services in a country and the growth of an ecomony is slow.

    Activity 4
    Write an essay on the impact of unemployment in Africa.

    7.5.3 Impact of unemployment on the economy globally

    Widespread unemployment has become a global problem. Some of the global consequences include the following:

    1. Slows down the growth of global economy: Unemployment leads to a decline in the global production of goods and services. This may lead to a global recession. A debt crisis in one economy may affect other world economies.

    Activity 5
    Research and find out the effects of economic recession in the USA and Greece to the global economy.

    2. Worsens the gap between the rich and poor countries of the world: The rich economies become richer whereas the poor economies become poorer. This may also trigger widespread violence, demonstrations, political conflicts and revolutions.

    Activity 6
    1. Research and find out how the revolution experienced in Tunisia in 2010 started.
    2. Discuss effects of the revolutions to the economy of countries in north Africa and Asia.

    3. Causes illegal immigration of people: Immigrants from Africa, South America and Asia go to Europe or North America in search of better job opportunities and improved living conditions. Many of them may experience xenophobia or end up living in deplorable conditions in foreign countries.

    Activity 7
    1. Discuss reasons why unemployed people from Africa go to Europe, USA and some Arab countries in search of jobs, using illegal means.
    2. Research and find out about the struggles that migrants go through in their search for greener pastures.
    3. Explain some of the consequences of being an illegal immigrant in a foreign country.

    7.6 Measures to reduce unemployment


    Activity 1
    1. Describe how a government will ensure there is checked population growth in a country.
    2. Give solutions that may reduce seasonal unemployment and create diversity in the agricultural sector in Rwanda.

    Some of the measures to reduce unemployment in an economy include the following:

    1. The population growth rate should be reduced to a level where the rate of expansion of the economy may be able to absorb the increasing labour force.

    2. Diversification of agricultural activities in the economy can reduce unemployment in the agricultural sector. This will reduce disguised and seasonal unemployment.

    3. There is need to encourage small-scale industries to absorb the unemployed labour force through self-employment.

    4. Adopting appropriate education systems and training curriculum to produce graduates with employable skills.

    5. Industries should be decentralised in the rural countryside to reduce rural-urban migration.

    6. The government, through appropriate monetary policies, should increase the quantity of money in circulation to avoid an economic recession. This should be done by lowering the bank interest rates to encourage investments.

    7. Employing a fiscal policy to cure recessionary economic conditions that exist within a country. If taxes (especially income tax) are reduced, disposable income increases. This increases demand for goods and services. This also stimulates investments as economic activities boom within the country.

    8. The government can improve its geographical mobility especially in rural and marginalised areas. This can be done by offering incentives to companies and industries that set up businesses there, or to the unemployed who seek employment in such areas.

    9. Governments should encourage innovation of new products and entrepreneurship. This will open up new markets within the country, create demand for more goods and services and generate new employment opportunities for unemployed persons.

    10. A country should invest in labour intensive technology as opposed to capital intensive technology. Such a move will ensure that more people will be employed instead of relieving workers from their jobs.

    11. Governments should invest in infrastructure development in rural areas.

    Activity 2
    Discuss and answer the following questions.

    1. One way of reducing unemployment in any economy is blending all the teaching and training curriculums with entrepreneurship education. Discuss this statement.

    2. Assess the role of internships and industrial attachments for students in Rwanda towards solving the challenge of skills mismatch and job creation.

    3. Judge the value of self-employment and entrepreneurship in reducing cases of unemployment in your district.

    4. Discuss ways in which agricultural and industrial diversifications in the country may reduce the problem of unemployment.

    5. Identify factors you think have frustrated the government’s efforts in reducing unemployment in the country.

    6. Appreciate the importance of reducing unemployment in an economy.

    Assessment Exercise 7.0

    1. With specific examples from your district, distinguish between the terms transport and transport infrastructure.

    2. Explain the relationship between transport infrastructure and economic development.

    3. Explain transport related problems which Rwanda is currently experiencing as a landlocked country.

    4. Explain how economic decline or stagnation in the performance of world economies, may cause cyclical unemployment.

    5. Discuss ways in which unemployment in Rwanda affects her economy.

    6. Explain measures the government is currently implementing to reduce the country’s unemployment problems.

    7. Examine the role of employment in the development of the economy of a country.

    8. Analyse the impact of transport towards achieving economic development.

    9. Identify the advantages of being self employed versus being employed.

    10. Appreciate the contribution of transport in accelerating economic development.

    Project
    1. Appreciate the role of transport and employment in the economy.

    2. Write an essay analysing the effects of unemployment on the economy and propose ways of reducing the rate of unemployment.







    ◄Unit 6: How to manage moneyUnit 8: International financial institutions, cooperation and development►