ECONOMIC DEVELOPMENT
economic and social development
- iIs the process by which the economic well-being and
quality of life of a nation, region, local community, or an
individual are improved according to targeted goals and
objectives.
- Is a policy intervention aiming to improve the well-being
of people, economic growth is a phenomenon of market
productivity and increases in GDP; The term has been used
frequently in the 20th and 21st centuries, but the
concept has existed in the West for far longer
"Modernization","Westernization", "industrialization"
are other terms often used while discussing economic
development
Historically, economic development policies focused on
industrialization and infrastructure; since the 1960s, it has
increasingly focused on poverty reduction
Economists primarily focus on the growth aspect and the
economy at large,
researchers of community economic development
concern themselves with socioeconomic development as
well.
economists in the 20th century
viewed development primarily in terms of economic
growth, sociologists instead emphasized broader processes
of change and modernization.
Karl Seidman - Development and urban studies scholar
- He summarizes economic development as "a process of
creating and utilizing physical, human, financial, and social
assets to generate improved and broadly shared economic
well-being and quality of life for a community or region"
Daphne Greenwood and Richard Holt distinguish
economic development from economic growth on the basis
that economic development is a "broadly based and
sustainable increase in the overall standard of living for
individuals within a community", and measures of growth
such as per capita income do not necessarily correlate with
improvements in quality of life.
Economic development is a wider concept and has
qualitative dimensions. Economic development implies
economic growth plus progressive changes in certain
important variables which determine the well-being of
the people, e.g.: health, education.
The University of Iowa's Center for International Finance
and Development states that:
'Economic development' is a term that practitioners,
economists, politicians, and others have used frequently
in the 20th century. The concept, however, has been in
existence in the West for centuries. Modernization,
Westernisation, and especially Industrialisation are
other terms people have used while discussing economic
development. Economic development has a direct
relationship with the environment.
Mansell and Wehn also state that economic development
has been understood by non-practitioners since the World
War II to involve economic growth, namely the increases in
per capita income, and (if currently absent) the attainment
of a standard of living equivalent to that of industrialized
countries.
Economic development can also be considered as a
static theory that documents the state of an economy at a
certain time.
According to Schumpeter and Backhaus (2003), the
changes in this equilibrium state documented in
economic theory can only be caused by intervening
factors coming from the outside.
History
Economic development has its roots in the post-war
reconstruction period initiated by the United States.
President Harry Truman identifying the development of
undeveloped areas as a priority for the west.
Since 1945, there have been several major phases of
development theory.
Alexander Gerschenkron arguing that the less developed
country is at the outset of economic development, and
the state playing a large role in promoting
industrialization in developing countries.
Neoliberalism emerged in the 1980s, pushing an agenda
of free trade and removal of import substitution
industrialization policies.
In economics, the study of economic development was
born out of an extension to traditional economics that
focused entirely on the national product, or the aggregate
output of goods and services.
Economic development was concerned with the
expansion of people's entitlements and their
corresponding capabilities, such as morbidity,
nourishment, literacy, education, and other socio-
economic indicators.
During Robert McNamara's 13 years at the World
Bank, key changes were introduced, most notably
shifting the Bank's economic development policies
toward targeted poverty reduction. Prior to his tenure,
poverty did not receive substantial attention as part of
international and national economic development; the
focus had been on industrialization and infrastructure.
Poverty also came to be redefined as a condition faced by
people rather than countries.
Economic development goals generally encompass
economic growth through higher productivity, political
systems that represent as accurately as possible the
preferences of its citizens, the extension of rights to all
social groups and the proper functionality of institutions
and organizations that can attend more technically and
logistically complex tasks (i.e. raise taxes and deliver
public services). These processes describe the State's
capabilities to manage its economy, polity, society, and
public administration.
However, many times the economic development goals
of specific countries cannot be reached because they lack
the State's capabilities to do so. For example, if a nation
has little capacity to carry out basic functions like
security and policing or core service delivery, it is
unlikely that a program that wants to foster a free-trade
zone (special economic zones) or distribute vaccinations
to vulnerable populations can accomplish their goals.
This isomorphic mimicry can contribute to getting
countries stuck in "capability traps" where the country
does not advance in its development goals.
Economic development
policies
Economic development policies focus on three main
areas:
 Governments aiming for price stability, high
employment, and sustainable growth through
monetary and fiscal policies, financial institution
regulation, trade, and tax policies.
 Programs providing infrastructure and services,
such as highways, parks, affordable housing,
crime prevention, and K-12 education, are also
crucial.
 Job creation and retention are also a primary
focus of economic development professionals.
Contractionary monetary policy, used by central banks
to slow economic growth, has been found to increase
women's unemployment in the United States.
Regional clusters and a thriving metropolitan economy
are also important aspects of economic development.
International trade and exchange rates are crucial issues
in economic development, with currency under- or over-
valuation causing trade surpluses or deficits.
Globalization has linked economic development to
trends in international trade, participation in global
value chains, and financial markets.
Economist Jayati Ghosh suggests providing a variety of
financial institutions to make financial markets more
resilient in developing countries, enhancing financial
security for small-scale producers.
Organization
A school of economic thought is a group of economists
who share a common perspective on how economies
work.
Economic thought can be divided into three phases:
premodern, early modern, and modern.
Systematic economic theory has been developed since
the modern era. Currently, most economists follow
mainstream economics, which focuses on
macroeconomics and microeconomics.
Distinctions can be made between saltwater economists
and freshwater economists within the macroeconomic
mainstream in the United States. However, there is
broad agreement on the importance of general
equilibrium, methodology, and partial equilibrium
models.
Some influential approaches, such as historical school of
economics and institutional economics, have become
defunct or declined, while others, like Austrian
economics and Marxian economics, have become
influential. Recent developments, like feminist
economics and ecological economics, adapt and critique
mainstream approaches with an emphasis on specific
issues.
Development indicators
and indices
Macroeconomic and sociocultural indicators are used by
economists and geographers to assess the economic
advancement of a region or nation.
The World Bank's World Development Indicators
include national, regional, and global estimates.
GDP per capita, calculated as the sum of gross value
added by all resident producers, is used to measure the
growth of the development population.
Modern transportation networks, such as high-speed rail
infrastructure, are also considered significant indicators
of a country's economic progress.
The United Nations has introduced the Gender-
Related Development Index (GDI) and the Gender
Empowerment Measure (GEM) to measure gender
equality.
The GEM focuses on capturing economic, political, and
professional gains made by women, while the
GDI measures the gender gap in human development
achievements, considering health, knowledge, and living
standards.