Using technology to improve economies A Vodafone case study
Page 4: Developing economies
Developing economies are those countries in the middle or bottom layers of the socioeconomic pyramid. These countries often face great difficulties in improving their economies. For example, in planned economies, assets like land or property are owned by government. Individuals and businesses are not used to making decisions and operating to make a profit. When Bulgaria moved from its previous planned economy to a mixed economy at the collapse of the Soviet Union, its agriculture, banking system and industry were not able to support the levels of output the economy needed. However, with investment, economic growth is now growing at a steady rate and Bulgaria was able to join the European Union in 2007.
Developing economies, like many emerging African nations, may also be market economies but share features which hold them back:
the population lives on very low incomes (typically less than $2 or about £1 per day)
poor infrastructure such as transport (roads or railways) or local government
poor communication systems
low levels of basic health and education
a low Gross National Product (GNP).
Kenya is a developing market economy. Its infrastructure and communications are extremely poor. Over 75% of the country's workforce is in agriculture which can be affected by the climate. Telephone landlines are scarce, expensive and difficult to install. Kenya has just 450 bank branches which are based in cities and tourist areas. 80% of Kenyan adults have no bank account. Many of these are self-employed business people, such as small farmers. Only 27 % have access to a bank because of the remote distances involved. In addition, theft is a problem in many areas. These problems mean that small businesses find it difficult to operate.