APPROACHES-OF-ECONOMIC-DEVELOPMENT.pdf

Approaches to economic development First before we proceed with our main topic, let’s first know what is the meaning of economic development. As we all know the term economic development is a term that economists, politicians, and others have used frequently. In which this could be mean different th...

Approaches to economic development First before we proceed with our main topic, let’s first know what is the meaning of economic development. As we all know the term economic development is a term that economists, politicians, and others have used frequently. In which this could be mean different things to different people. Definition of Economic Development Economic development can be defined as social and technological progress. It typically refers to improvements in a variety of indicators such as literacy rates, lite expectancy and poverty rates. Economic development can also be defined as the sustainable increase in living standards. It implies increased per capita income, better education and health as well as environmental protection. Economic development is also viewed as the development of economic wealth of countries or regions for the wellbeing of their inhabitants. It is the process by which a nation improves the economic, political, and social wellbeing of its people. Going to the question what is development economics used for? Development economics is the study of how emerging nations become more financially stable. It can be used as a tool for students and economists working to develop policies that can be used in creating domestic and international policy. Goal of development economics Development economics is meant to help better the financial, economic and social circumstances in developing countries through the enactment of certain structures and policies. Next was the type of development economics First was mercantilism Mercantilism is thought to be one of the earliest forms of development economics that created practices to promote the success of a nation. The theory promoted augmenting state power by lowering exposure to rival national powers. Furthermore, mercantilism promoted government regulation by prohibiting colonies from transacting with other nations. Next, Economic Nationalism 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. They focus on a policy that is isolationist so that the industries within a nation are able to grow without the threat of competition from established companies in other countries. Next, Linear Stages of Growth Model Linear stages of growth model was used to revitalize the European economy after World War II. In which this model states that economic growth can only stem from industrialization. The model also agrees that local institutions and social attitudes can restrict growth if these factors influence people's savings rates and investments. Moreover, linear stages of growth model portrays an appropriately designed addition of capital partnered with public intervention. Next, Structural-Change Theory 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. Next will be the sections that dedicated to approaches to economic development from a historical perspective. Classical/Neoclassical Approach: Emphasizes free markets, competition, and limited government intervention. It suggests that economic growth is driven by supply-side factors like capital accumulation, technological innovation, and labor productivity. Keynesian Approach: Advocates for active government intervention to manage demand, stabilize the economy, and reduce unemployment through fiscal and monetary policies. Structuralist Approach: Focuses on structural issues within the economy, such as the need for industrialization and addressing the constraints of underdeveloped countries. Dependency Theory: 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. Endogenous Growth Theory: Stresses the role of knowledge, innovation, and human capital as internal factors that drive economic growth. Developmental State Model: Involves a strong state role in guiding economic development, often through industrial policies, subsidies, and state-owned enterprises, exemplified by the East Asian Tigers.