The Bottom-Up Economic Model| How Does It Compare to the Top-Down Economic Model?

In Summary

• A bottom-up model concentrates on distribution of wealth to the community and individuals.
• Which one is better, the top-down model or bottom-up approach?

His excellency, Kenya’s President Dr. William Ruto unveiled the bottom-up economic model also known locally as the “hustler economic model” as his manifesto during his campaigns in 2021. He said the bottom-up approach would promote investments made by ordinary Kenyan citizens- financially empowering them while spurring the Kenyan economy through tax generation.

Generally, the bottom-up economic model focuses on specific micro attributes of promoting financial investments and instruments that target unemployment, SMEs and entrepreneurs. The concentration being on business-by-business or sector-by-sector.

The Top-down economic model on the other hand is commonly associated with macroeconomics. The model looks at the biggest factors affecting the economy as a whole such as unemployment rates, global and a country’s GDP, and inflation rates. Decisions are made by looking at worldwide economics- then a country’s economy- then refinement of a specific sector- then to individual companies within that sector.

Bottom-up and Top-down models are used in conjunction with one another by most economies though they are distinctly different.

Characteristics Of A Bottom-Up Model

1. A bottom-up approach starts by targeting a local sector or specific variables and then expanding outward.
2. A bottom-up model is pro-productivity as opposed to consumptive dependency: The emphasis is on the economic activities of households and communities. People focused.
3. Bottom-up is more focused on micro variables specifically on local communities: Economies are built around diverse local businesses and innovations.
4. A bottom-up model concentrates on distribution of wealth and ownership capital for the local communities.
5. Just like decentralization, the bottom-up model seeks to solve problems and build community wealth through the economy at a local level.
6. The bottom-up model cultivates local innovation and social entrepreneurs who support the local and national economy.
7. A bottom-up economic model aids in creating jobs through local solutions understood by the community.

What Is the Main Difference Between a Bottom-Up and Top-Down Approach?

• A bottom-up approach identifies various companies and picks the ones with the best future prospects.
• A top-down approach looks at the overall economy and invests in companies within the industries that affect the economy directly.
• A bottom-up model concentrates on distribution of wealth and ownership capital to the local communities.
• Due to its generalized nature, a top-down approach may overlook great opportunities by ignoring and eliminating local companies that have potential.

In conclusion, a bottom-up model begins at the micro level and then broadens out. A top-down analysis begins at the macro level and then homes in on a more local level. In the end, every approach has its own pros and cons.