1. Psychosocial development in middle childhood involves developing feelings of industry through mastery or feelings of inferiority through failure and withdrawal. 2. Children's views of themselves become more differentiated and their self-esteem and self-efficacy often increase during this period. 3. Friendships become increasingly important and influence children's development through providing companionship, stimulation and other functions. Popular children tend to be socially competent while bullies often have issues at home.