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Economic development is the progress an economy experiences due to growth, technology, or an improvement in general living standards. To measure this progress, a nation or government engages in economic development analysis. This process can follow the business review process called SWOT, which is a look at an economy’s strengths, weaknesses, opportunities, and threats. Individual factors reviewed in economic development analysis include demographic, employment, business, and industrial trends. In most cases, this analysis is an ongoing process.
Strengths in an economy can be any specific item that is growing or provides more opportunities than before. For example, economic development analysis may show a rise in employment and employee wages, which can lead to a better standard of living. The efficient use of resources also represents strength. Economists look for any number of items that can make an economy stronger and attempt to duplicate the regulations that resulted in these strengths. Each trend mentioned above can be an economic strength.
Weaknesses in economic development analysis are the opposite of strengths. An economy may be weaker when policies or standards implemented do not result in the intended effect. Weaknesses may also be external to a local economy or economic development. For example, a slowdown in the national economy may result in a local economy becoming weaker. If the central bank increases interest rates, individuals may not seek loans, resulting in lower levels of economic development.
Opportunities in economic development analysis represent finding new activities in which to grow an economy. A local or state economy, for example, may look to international companies for investment. Investments from outside sources can spur economic development due to more jobs being brought to the area. Other opportunities may be removing regulations that restrict businesses or individuals from maximizing their personal economic wealth. Economic opportunities may not last forever, forcing economists to act on opportunities in short order.
Threats are any item that may reduce economic development in the future. This part of economic development analysis may be very important. Economists look for these issues in order to avoid them or ensure the impacts from economic threats do not seriously damage the economy. Common threats are overspending by government agencies, inflation brought on by inappropriate monetary policies, or the loss of natural economic resources. Competition can also be an economic threat, where another locale nearby the original economy is better for individuals or businesses, resulting in those parties moving to the new economic area.