Retailing Environments in Developing Countries

By Allan M. Findlay; Ronan Paddison et al. | Go to book overview
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Chapter two

Retail change and economic development

Ronald Savitt

The purpose of this essay is to discuss the role of retailing in economic development. The discussion is limited to outlining frameworks by which retailing's role in the economic development process can be evaluated. By choice it will neither review the vast literature of economic development retail studies nor discuss the theories of retail change. Both can be found elsewhere (Savitt 1982, Wood and Vitell 1986).

The issues of economic growth and economic development

In order to understand how retail change fits in the development process, it is necessary to understand two basic concepts, economic growth and economic development.

Economic growth is a precise economic concept, concerned with 'the growth of output' and it is related 'to goods and services-“economic” output in the old fashioned meaning of economic-and not to some such concept as welfare, satisfaction or happiness' (Lewis 1955:9). Further, it is about production and not about consumption and the central emphasis is with the selection of processes by which more economic goods and services are produced. And, the best measure of how well an economy is doing is in terms of the 'growth or output per head of population' (Lewis 1955:10).

Economic growth is divided into two parts separated by the turning point Extensive economic growth is a situation in which any increased production capacity is absorbed by the present population without any increase in per capita income. 'A situation in which capacity to produce is rising appreciably faster than population, so that there is sustained rise in per capita income' is defined as intensive growth. The turning point, is the point at which extensive growth turns into intensive growth; it is a change which is not inevitable and which has taken place in some countries but not in others (Reynolds 1983:941).

Since retailers produce goods and services it is appropriate to examine changes in retailing to economic growth. As one might expect


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