Economic Development Approaches

Study Notes

Economic development refers to social and technological progress, improvements in indicators such as literacy rates, life expectancy, and poverty rates.
It can also be defined as the sustainable increase in living standards, implying increased per capita income, better education, and health, as well as environmental protection.
Economic development is the process by which a nation improves the economic, political, and social wellbeing of its people.

Development economics is the study of how emerging nations become more financially stable.
It is used to develop policies that can be used in creating domestic and international policy.
The goal of development economics is to help better the financial, economic, and social circumstances in developing countries through the enactment of certain structures and policies.

Mercantilism is one of the earliest forms of development economics that created practices to promote the success of a nation.
It promotes augmenting state power by lowering exposure to rival national powers.
It promotes government regulation by prohibiting colonies from transacting with other nations.

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

Linear stages of growth model was used to revitalize the European economy after World War II.
It states that economic growth can only stem from industrialization.
It agrees that local institutions and social attitudes can restrict growth if these factors influence people's savings rates and investments.

Structural-change theory focuses on changing the overall economic structure of a nation, which aims to shift society from being a primarily agrarian one to a primarily industrial one.

Emphasizes free markets, competition, and limited government intervention.
Suggests that economic growth is driven by supply-side factors like capital accumulation, technological innovation, and labor productivity.

Advocates for active government intervention to manage demand, stabilize the economy, and reduce unemployment through fiscal and monetary policies.

Focuses on structural issues within the economy, such as the need for industrialization and addressing the constraints of underdeveloped countries.

Suggests that the economic development of poorer countries is hindered by their dependence on wealthier countries, advocating for self-sufficiency and reducing reliance on foreign capital and technology.

Stresses the role of knowledge, innovation, and human capital as internal factors that drive economic growth.

Involves a strong state role in guiding economic development, often through industrial policies, subsidies, and state-owned enterprises, exemplified by the East Asian Tigers.