Development Economics
Candlefocus EditorThe focus of development economics is based around four primary areas – health, education, working conditions, and market conditions. Therefore, it is a multidimensional approach, which considers not only economic concerns, but also cultural, political, legal and social factors that are influencing the development of a nation.
When researching development economics and formulating policies, four main theories are taken into consideration – mercantilism, nationalism, the linear stages of growth model, and structural-change theory.
Mercantilism is an economic theory based around the notion of promoting a nation’s prosperity through liberal use of state-backed trade, plenty of investment and favorable foreign policies. This theory can heavily influence economic policies such as tariff advantages, a healthy tax system and regulations on imports.
Nationalism is another approach which looks at enhancing the economic well-being of a nation by creating policies that protect local business, supporting home-based resources, creating freedom from foreign traders and discrimination of local firms over foreign businesses.
The linear stages of growth model looks at improving the economic condition of a nation by presenting it as a linear process comprised of three stages. The first stage being one of primitive subsistence, leading to a second stage of commercial emergence and eventual urbanization. Finally, this leads to a third stage of industrial success and increased public welfare.
Lastly, structural-change theory looks at how the composition of employment and production changes over time and how bettering these components can result in increased economic stability and improved living standards.
In addition to understanding the different theories of development economics, policy makers must also be aware of the different types of economic aid that are available to assist those in need. These can include direct foreign investment, grants from foreign companies and governments, medical aid and improved infrastructure.
Ultimately, the goal of development economics is to reduce poverty, pave the way for economic stability and sustainability, and create living conditions for the citizens of developing nations. Though the processes required to implement policies and bring about change are complex, the fruits of this labour will make all the difference in the future of a nation.