Development Economics Definition

SEC Release IA-1092

What is development economics?

Development economics is a branch of the economy that focuses on improving fiscal, economic and social conditions in developing countries. The development economy takes into account factors such as health, education, working conditions, national and international policies and the state of the market, with an emphasis on improving conditions in the least developed countries. poorest people in the world.

The field also examines macroeconomic and microeconomic factors related to the structure of developing economies and to national and international economic growth. Macroeconomics refers to widely influencing factors such as interest rates, while microeconomics refers to individual influences.

Development economics also examines macroeconomic and microeconomic factors related to the structure of developing economies and to national and international economic growth.

Development economics explained

Development economics studies the transformation of emerging nations into more prosperous nations. The strategies for transforming a developing economy tend to be unique because the social and political backgrounds of countries can vary widely.

Economics students and professional economists create theories and methods that guide practitioners in determining which practices and policies can be used and implemented at the national and international policy level.

Some aspects of development economics include determining the extent to which rapid population growth promotes or hinders development, the structural transformation of economies, and the role of education and health care in development. They also include international trade and globalization, sustainable development, the effects of epidemics such as HIV and AIDS and the impact of disasters on economic and human development.

Prominent development economists are Jeffrey Sachs, Hernando de Soto Polar and Nobel laureates Simon Kuznets, Amartya Sen and Joseph Stiglitz.

Example of the real world – Mercantilism

Mercantilism was a dominant economic theory practiced in Europe from the 16th to the 18th century. The theory promoted increasing state power by reducing exposure to rival national powers.

Like political absolutism and absolute monarchies, commercialism favored government regulation by prohibiting the colonies from transacting with other nations. Commercialism monopolizes the markets with basic ports and prohibits the export of gold and silver. It did not allow the use of foreign vessels for trade and optimized the use of domestic resources.

Economic nationalism as an example

Economic nationalism reflects policies that focus on the internal control of capital formation, the economy and labor using tariffs or other barriers. It restricts the movement of capital, goods and labor. Economic nationalists generally do not agree with the benefits of globalization and unlimited free trade.

Example of the linear growth stages model

The linear stages of the growth model were used to revitalize the European economy after the Second World War.

This model asserts that economic growth can only come from industrialization. The model also agrees that local institutions and social attitudes can restrict growth if these factors influence individuals’ savings and investment rates. The linear stages of the growth model represent an inflow of capital designed appropriately in partnership with public intervention. This capital injection and public sector restrictions lead to economic development and industrialization.

Other notable theories include the theory of structural change, the theory of international dependence and the neoclassical theory.

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