Economic environment unit8

1. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
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Introduction to Basic Economic Theory and Concepts
The Banking Economic Systems
Pricing and Price Mechanism
Inflation
The Government and Economy
Types of Business Organizations
MODULE COVERAGE
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International Trade and Regional Groupings
Economics and the Environment

2. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
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Meanings of the two concepts
Economics is a social science that analyzes and describes the consequences of choices
made concerning scarce productive resources. It is the study of how individuals
and societies choose to employ those resources: what goods and services will be
produced, how they will be produced, and how they will be distributed among the
members of society.
In choosing how to use scarce resources to alternative uses for optimum personal,
firm or national benefit, care has to be taken that the natural environment is
preserved, conserved and in some cases enhanced.
The environment is made up of various factors such as the economic environment,
socio-cultural environment, political, technological, demographic and
international, which affect the business and the way it works. However, the most
important is the economic environment which affects business.
For the sake of this unit, we shall focus on the natural environment – the ecology, wild
life, vegetation, climate, weather and other natural phenomena that support life
and society.
Globally and nationally, environmental conservation has become an urgent item on
the development agenda. Whereas it used to be discussed mainly as an interesting
sideline topic to development, the preservation of natural environment has
become a top-level issue in all development concerns.
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3. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
Global trends in environmental conservation
Issues to do with environmental protection (and especially conservation) continue to
increase in the priority list of the global development agenda.
The United Nations Framework Convention on Climatic Change (UNFCC) was signed by
more than 150 counties at the United Nations Conference on Environment and
Development in 1992.
Subsequently the Kyoto Protocol has been ratified by many countries and several
industrialized countries as well as corporations increasingly support conservation
efforts. This reflects the seriousness with which leaders are taking environmental
protection. In recent years, the environment as a central development issue has
assumed increasing importance in all international, regional, continental and
national planning.
Multinational organizations now actively seek to buy carbon credit to offset their
negative contribution to environmental wellness. This is reflected in Millennium
Development Goal 7: Ensure environmental sustainability reflects active concern
for environmental conservation at the global level.
Conservation and revitalization of the environmental is likely to remain a key
development challenge for coming decades.
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4. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
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Environmental conservation and management in Uganda
In the National Development Plan (Uganda’s current development planning
framework), environmental sustainability is one of the eight strategic objectives.
This corresponds with MDG 7, an area in which the country has put some effort
but not performed particularly well.
Of the four measures for monitoring this MDG, Uganda is on track on just one: safe
water for the population.
The other aspects directly concerned with loss of biodiversity and other
environmental aspects are either lagging or stagnated.
This means conservation and revitalization of biodiversity should be top on Uganda’s
development agenda – and it is.
As a development aspect, increased activity in conservation is needful because
Uganda is endowed with significant portions of the world’s biodiversity and natural
resources. This biodiversity forms the basis for most economic activities in the
country, ranging from agriculture to tourism.
To a significant extent, the country’s prosperity is dependent on the wise use of this
biodiversity which is unfortunately facing a number of threats and weaknesses
that undermine conservation.
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5. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
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Interrelationship
Economics cannot exist in isolation, it cannot even be a mere study of how goods and
services are produced, and therefore, it has to take into consideration the impacts
of the use of resources on the environment. The impacts may be in the form of
externality, pollution or exhaustion.
• Any study on the economic content of production, distribution and development
cannot be completed without touching upon the environmental aspects like
externality, pollution, damage, exhaustion and depletion.
• It is therefore important to understand the interrelationship between the
environment and economics and how to promote economic growth of nations
with least environmental damage.
• The environment is the supplier of all forms of resources; households and firms
are connected to environment, and they are interconnected too. Households and
firms depend on nature for resources. Both households and firms send out
residuals of consumption and production respectively to nature thermodynamics.
• If we destroy the environment in pursuit of economic prosperity, the very base of
that economic prosperity will also be destroyed and thus we shall suffer
economically. It is therefore not only a scientific or bio-geographical need to
preserve the environment: it is necessary for sustainable economic prosperity.
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6. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
END
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