Economic Development

Governments big and small use the term “economic development” to refer to efforts to grow their economies.

Why is that important and how do you do it? If you got time, this video is superb. Otherwise, here are some key takeaways:

• Healthy economies are good for everybody because one person’s spending is another person’s income, and vice versa.
• Increasing productivity while maintaining a reasonable debt-to-income ratio is the best way to grow an economy.

Indeed, the economy works just like an individual’s finances. The best way to increase your income and be able to say, buy a house, is to increase your productivity through education or training and to keep your debt in check.

This chart shows the productivity (GDP) growth and debt ratios of countries throughout the world, for context.

Source: Visual Capitalist

Italy is the most worrisome to me with the combo of declining growth and a high level of debt. But most of the others are bad too. Thinking again about an individual’s finances, you typically need a debt-to-income ratio of 43% or less to qualify for a mortgage.

Have thoughts? Want to know more? Please share in a comment!