Many reasons exist for economic development: It can increase tax revenues, create jobs, and improve the quality of life. In addition, economic growth can help protect a community from economic downturns. Listed below are some of the essential benefits of economic development.
Economic Development
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Increases Tax Revenues
The conversion of tax revenues to government spending is measured by the Human Development Index and World Development Indicators. Tax rates in developing countries vary greatly based on economic development. For instance, Ireland and Malaysia have low total tax rates, while countries such as Afghanistan and Angola have relatively high total tax rates. Economic development increases tax revenue and public expenditure and requires growth in tax collections to finance the increased spending. Hence, the higher tax rates in developing countries may not necessarily lead to higher public spending.
In addition to local sales tax receipts, economic development also increases property tax revenues. New businesses generate property tax revenues, which continue to grow even after the tax abatement period ends. Furthermore, taxes on developed property are higher than those on undeveloped properties. This means that the tax revenue generated from developed property provides a long-term source of income for the local government. The more economic development a community sees, the higher its tax revenues.
Creates Jobs
A key objective of economic development is to increase net new jobs in a region. Economic development aims to increase the number of jobs in a region while simultaneously growing the overall economy. This can be accomplished through bringing in new companies, either via an expansion or a new headquarters or by supporting existing companies to increase their job creation within the region. While this type of development is less visible than expansion, it is still essential since existing firms create most new job growth.
The best economic development proposals involve direct employment generation. This job creation aims to bridge the gap between temporary spells of unemployment and more permanent employment. Examples of direct employment generation programs are the Civilian Conservation Corps, a work program developed during the Great Depression, and the Comprehensive Employment and Training Act of the 1970s. These programs are intended to help disadvantaged groups and create a more robust economy. However, regardless of their form, all types of job creation are essential to the economy.
Improves Quality of Life
While it’s hard to measure the impact of economic development on the quality of life, it is essential to note that a city can be better if it has more amenities, including a downtown. People need public safety and emergency services like doctors and emergency rooms. However, economic development does not directly manage public safety since the revenue generated from development projects goes to maintaining these vital services. The local leaders and businesses should identify assets that contribute to the quality of life in the community.
For a better quality of life, an individual should have access to good health care, a safe and healthy place to live, a meaningful job, and affordable housing. In addition, access to good healthcare, clean water, and healthy food are important indicators of overall well-being. Governments can also help by funding good public schools, providing healthcare at an affordable price, and supporting family-friendly policies such as paid leave. The quality of life in an area is often a reflection of its quality of life.
Also read: Top Ways To Save Money During Economic Recession
Protects Against Economic Downturns
Developing your business and putting it in a solid position to withstand a recession can help protect you from the effects of a global downturn. In addition, more substantial companies can withstand unforeseen events and risks. Not only does business development focus on improving financial management, but it also includes strategies to retain customers, increase marketability, and boost morale in the workforce. You can also strengthen your connections with other businesses and find networking opportunities.
