Economic Development Concepts

Economic Development

• Economic development is the sustained improvement of societal quality of life, emphasizing sustenance, self-esteem, and freedom.
• Sustenance involves fulfilling basic needs like food, shelter, healthcare, and security.
• Self-esteem relates to individual dignity, pride, and social acknowledgment.
• Freedom encompasses a range of choices and minimizes external restrictions, including political liberties and economic opportunities.

Aspects of Economics Study

• Positive Economics examines factual states and causal relationships in economic behavior, focusing on "what is."
• Normative Economics evaluates outcomes and makes value judgments, internalizing fairness and desired economic policies.

Theories and Models

• A good economic theory should balance simplicity and complexity, providing clear explanations for phenomena.
• Models apply these theories practically, demonstrating relationships between variables through graphs, diagrams, or formulas.

Definitions of Economics

• Economics is the study of resource allocation to satisfy unlimited human wants amidst scarcity, originating from the Greek terms 'Oikos' (household) and 'Nomous' (management).
• It is often referred to as the science of scarcity, aiming to explain economic behaviors related to resource exchange.

Key Concepts

• Scarcity occurs when human wants outweigh available resources, necessitating choices in resource allocation.
• Unlimited human wants drive the economy, making satisfaction a continuous challenge.

Hierarchy of Needs

• Physiological Needs: Basic life necessities (air, water, food).
• Safety Needs: Protection from danger and threats.
• Social Needs: Acceptance, belonging, love, and friendship.
• Esteem Needs: Self-confidence, recognition, and respect.
• Self-actualization: Realizing personal potential and fulfillment.

Factors of Production

• Land: All natural resources without human intervention, including air, forests, and minerals.
• Labor: Human effort, both physical and mental, to produce goods and services.
• Capital: Man-made goods used in production processes.
• Entrepreneurship: The ability to create and exploit business opportunities, involving skills, vision, and risk-taking.

Economic Questions

• What will be produced? Prioritization of crucial goods.
• How will it be produced? Decision on production techniques based on available resources.
• For whom will it be produced? Allocation based on purchasing capacity of the population.

Types of Business Activities

• Manufacturing: Creation of new products from raw materials.
• Merchandising: Buying products to resell to consumers.
• Service Companies: Offering services rather than physical products.

Branches of Economics

• Microeconomics: Focuses on individual or company decision-making.
• Macroeconomics: Examines the economy as a whole, analyzing aggregate outcomes.

Economic Systems

• Market Economy: Private entities own resources and answer economic questions based on profitability and consumer capacity.
• Command Economy: Government owns resources, decides on production to promote public welfare, and employs available labor.
• Mixed Economy: Combines government and private sector decisions for mutual benefit.

Opportunity Cost and Trade-offs

• Opportunity cost is the loss of potential gain from choosing one alternative over another.
• Trade-offs result in either satisfaction of needs or failure to meet them, exemplified by choices in consumer products.

Conclusion on Economic Development

• Economic development enhances community wealth, providing broader benefits such as job creation, economic growth, and improved quality of life for residents.