small_business.jpgSmall Business

The first step up on the ladder of economic development occurs when farmers produce enough food that they have some surplus which can go to market and generate income for them. They can then afford to purchase other goods they need. Eventually, markets are born where people specialize in different activities, as opposed to having everyone be a subsistence farmer. One option for specialization is to go into small-scale commerce.

The MV Sim gives families the option to open a small business, as an example of small-scale commerce. The income a family gains from engaging in small business depends on the family productivity (including whether there is electricity), how much effort (in person-hours) is dedicated to the business, how prosperous the other villagers are at the moment (proxied by how the year’s precipitation compares with average precipitation and whether there is an epidemic underway), the extent of the market (proxied by whether there is a road), and how much capital (e.g. money, machines) is invested in the business. The capital is assumed to depreciate at a slow rate over time, as physical objects purchased for the business wear down.