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Kucheryavenko Svetlana Alekseevna,




Lecturer department of accounting and audit, institute of economics,

Belgorod State National Research University,

candidate of economic science;

Simutowe Esau,

Student institute of economics,

Belgorod State National Research University

Belgorod, Russia

The world has experienced many changes in the recent years and each society works so that it can improve its socio-economic status. Social and economic development has become the center of the day-to-day activities of almost all the regions of the world. The Southern African Development Community region has also taken an active role to improve its social and economic status. The Southern African Development Community (SADC) is a regional body formed on 1 April 1980 that comprises of 15 countries/states in Southern Africa. These countries are Angola, Botswana, Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, United Republic of Tanzania, Zambia and Zimbabwe. The main goal of the SADC is to promote equitable and sustainable economic and social development through efficient productive systems, deeper co-operation and integration, good governance and durable peace and security among fifteen Southern African Member States.

The SADC has many objectives that member states aim to achieve and the main ones are: to alleviate poverty, enhance good standards of living of the people of the Southern African Development Member Countries, achieve economic development, peace and security and support the socially disadvantaged through regional integration. The SADC member countries aim to achieve the target objectives through increased regional integration built on sound democratic principles and sustainable and equitable development [6, p. 5].

The SADC region has been facing many socio-economic challenges since its formation in 1980.

Social and economic development in the SADC region has been slow due to many challenges that range from technological to human resource. The main challenges to social and economic development the SADC region are:

Political situation. Political instability in some member states of the SADC region has had negative effects on social and economic development in the particular countries and the region as a whole. Zimbabwe had one of the worst experiences of political of instability after the 2008 disputed elections in which the incumbent President Robert Gabriel Mugabe emerged as the winner when the results that were released for about two weeks after voting. The fighting between different political groups in the country and the sanctions of Zimbabwe led to an economic crisis in the country, prices of goods went up due to food shortages in the country, and there was hyperinflation. This political and economic crisis in the country affected economic development in the region. Another member state, Madagascar also had political problems after the ousting of President Marc Ravalomanana by a group led by the then-mayor of Antananarivo, AndryRajoelina. This contributed to poor economic performance in the country [5, p. 5].

Diseases in the SADC region are one of the challenges to social and economic development. The high levels of HIV/AIDS in the region have had a very negative impact on the social and economic development in the region as most people who are supposed to be contributing to the development of the region die because of HIV/AIDS. This also results to increased poverty levels in the region [3, p. 5].

The cost of doing business and inadequate start of the art infrastructure. High costs of doing business in many countries of the region negatively affects social and economic development. This is due to long and expensive processes that are involved in the registration of businesses in some member states of SADC. One of the factors that contribute to the high cost of doing businesses in the region is electricity. Electricity tariffs in the region are very high and there is inadequate supply of electricity hence having low production levels because many big companies need electricity in their production process. Telecommunication services such as internet are also expensive in the region hence increasing the cost of doing business. This negatively affects social and economic development in the region considering the importance of information technology in the modern era.

Skills shortage and the education system. The education system in most SADC countries does not train people who are specialized in the fields that respond to the needs of the social and economic development of the region. Most countries still use old education systems that do not meet the current challenges of the modern world, there are a few graduates of technological fields to enhance the development in the area of science and technology, and this has been one of the hindrances to economic development.

GDP is one of the indicators used to determine economic growth and development in the SADC region [1,4, p. 5]. Despite the challenges faced in attaining sustainable social and economic development in the SADC countries, there has been positive indicators pertaining to social and economic development of the region. According to the Economist Intelligence Unit, two of Africa’s ten fastest growing economies (Zambia and Mozambique) in the year 2013 are members of the Southern African Development Community. Apart from having two of the ten fastest growing economics in Africa in the year 2013, the region also has one of Africa’s biggest economies, South Africa which also a member of the BRICS countries(Brazil, Russia, India, China and South Africa). The gross domestic product (GDP) in many SADC member countries has continued to increase over the recent years at a growth rate of 4% to 10% yearly except in those countries that have faced political instability in which negative results have been recorded when it comes to economic and social and social development. Graph 1.1 shows the gross domestic product for the 15 SADC countries for the period 2002-2012 and table 1.1 shows the percentage growth rate of GDP for 2003-2012.

Graph 1.1.

Source: World Bank

Table 1.1.

GDP growth (%), 2003-2012

Indicator                    
GDP, billion US$ 243,95 308,45 352,27 388,06 442,55 467,53 467,81 570,29 648,40 648,25
Growth, % 37,51 26,44 14,21 10,16 14,04 5,65 0,06 21,91 13,70 -0,02

 

As shown in table 1.1 and graph 1.1, the gross domestic product of the SADC region for the period 2002-2012 has been increasing year in year out except for the year 2012 under which a reduction of 0.15 billion US$ was recorded. This is due to increased economic activities in most countries of the region. The biggest contributor to the GDP of the SADC region for the period 2002-2012 is South Africa with 63.61% of the total GDP of all the eleven years followed by Angola with 13.51%. The least contributor to the GDP of the region under the same period Seychelles contributing only 0.22% of the total GDP for that particular period. The average GDP growth for the period 2002-2012 was 14.36%, the highest GDP growth rate being 37.51% recorded in the year 2003 whilst the year 2012 had a decrease in GDP by 0.02%. The gross domestic product per capita in the same period increased by 134.05% from 1582.59 US$ in the year 2002 to 3704.06 US$ in the year 2012.

One of the factors that contributes to the growth of the GDP in the SADC region is foreign direct investment. Foreign direct investment plays an important role in the economy of any country and region as a whole as it helps in boosting the economic activities in that particular area and subsequently leads to job creation and availability of goods and services hence improving the social and economic status of the people. China is the biggest contributor of foreign direct investment in region and has been involved in the operations and takeover of many companies in the region. China’s investment by the end of the year 2011 amounted to over US$9 billion representing 79.58% of the total foreign direct investment in that particular year [2, p. 5]. Graph 1.2 shows foreign direct investment inflows in the SADC region for the period 2002-2012 while table 1.2 shows the percentage growth of foreign direct investment for the period 2003-2012.

Graph 1.2.

Foreign Direct Investment (billion US$), 2002-2012

Source: World Bank

Table 1.2.

Foreign Direct Investment growth (%), 2002-2012

Indicator                      
FD1,billion US$ 5,36 6,73 4,62 7,95 3,93 12,45 19,50 14,51 10,53 11,31 11,38
Growth,%   25,53 -31,33 71,92 -50,63 217,13 56,66 -25,60 -27,43 7,40 0,65

 

As shown in graph 1.2 and table 1.2, foreign direct investment inflows have not had a continuous growth tendency in the period 2002-2012 i.e. they have been fluctuating year after year. The highest growth rate of foreign direct investment in the SADC region is the one recorded in the year 2007 with a 217.13% increase. In 2008, there was only an increase of 56.66% representing a decrease of 160.47%. The global financial crisis of 2007-2008 had negative effects on foreign direct investment inflows in the SADC region and the results were so bad to an extent that in the years 2009 and 2010 foreign direct investment reduced by 25.60% and 27.43% respectively. In the year 2011, this started normalizing and there was an increase in foreign direct investment inflows by 7.40% and in the years to come there is an expected increase in foreign direct investment inflows in the region due to its great economic potentials.

Life expectancy is one of the main indicators of social development in any region of the world. An increase in life expectancy shows how the health status of that particular region has improved and this has direct links to the economic status of that particular region. In order to analyses the social development of the SADC region, we decided to look at the life expectancy in the region. Graph 1.3 shows the average life expectancy at birth in the SADC region for the period 2002-2011.

 

Graph 1.3.


Source: World Bank

 

The life expectancy at birth in the SADC region has experienced a continuous tendency of growth from the year 2004 to the 2011 after it had a slight drop of 0.04 years in the year 2003 [7, p. 5]. In the period 2002-2011, the life expectancy at birth increased by 4.75 years (9.17%). The increase of the life expectancy at birth in the region is due to an increase in spending by the governments of the member states in the health sector in line with agreement by the member states and programs aimed at fighting HIV/AIDS. Health services in the region have improved of late and many health centers have been put up even in rural areas and is some cases mobile hospitals are being used as a means of reaching out to people in remote areas for example in Zambia.

In conclusion, the political environment plays a big role in the development of the SADC region. Foreign direct investment inflows are expected to increase in the next five or more years to come looking at the political situation in most member countries as most of them have had elections and changes of government are not expected soon. This is because investors consider it safe to invest in a region that is stable both politically and economically. However, the challenge of the region is to ensure that economic development directly improves the standards of living of the people and poverty levels reduce in the region. Finally, there is need for the region to come up with a mechanism that will provide a conducive environment for business/economic and human development and the process of economic integration must speed up so that the region can effectively compete with regions such as the European Union and Asian regions.

 

References

1. Campbell R. McConnell, Stanley L. Brue. Economics. Principles, problems and policies (Russian Version) [Text]. Fourteenth edition, 2003. – pp.134-143.

2. China.org.cn [Electronic resource}. http://www.china.org.cn/business/2010-12/18/content_21569667.htm

3. Joseph E. Stiglitz, Carl E. Walsh. Economics, fourth edition, 2006 [Text]. W.W Norton &Company- pp. 794-801.

4. Lord Robbins. The theory of economic development in the history of economic thought [Text]. Macmillan St Martin’s Press.–pp. 3-4.

5. Report of the executive secretary. Activity report of the SADC secretariat, 2011-2012[Text]. – p 4.

6. Southern African Development Community [Text]. http://www.sadc.int/

7. World Bank [Electronic resource].http://data.worldbank.org/indicator

 

Исследование сущности и видов лизинга

 

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