Introduction

What is the importance of studying Contemporary Economic Issues?

It helps us identify the most important economic issues that may hinder the
process of economic growth and development in different developed and
developing countries.
What is the difference between economic growth, economic development, and
sustainable development?
 Economic growth
 Is the steady process by which the economy’s productive capacity is
increased over time (ongoing process for at least 1-2 years) leading to
higher levels of national output and income.
 Thus, Economic growth is the increase in the value of goods and services
produced by an economy. It is measured as the percentage change in real
gross domestic product (GDP).
 Growth is calculated in real terms, i.e., inflation-adjusted terms, in order to
neutralize the effect of inflation on the price of goods and services
produced. Hence, “economic growth” refers to growth of potential output.
 Accordingly; economic growth takes place when there is a continuous
increase in a country’s output (as measured by GDP) or in the per capita
output (GDP per person).
 However, per capita GDP is a better indicator of growth than GDP because
if the population grows faster than output, GDP would grow while per
capita GDP falls; in this case the economy is not achieving a real growth.
Also, growth ignores environmental quality and the distribution of income
and other social factors.

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 Economic development
 It is economic growth accompanied by structural change, and is defined as
“the development of the economic wealth of a country for the well-being
of its population”.
 That is, Economic development is a continuous increase in the standards
of living that implies increased per capita income, better education, and
health.
 The main difference between economic growth and economic
development, is the way of income distribution between different
economic sectors, leading to structural changes within the economy. For
example; it is possible to increase the industrial sector's share of national
income at the expense of the agricultural sector's share, in order to raise
employment rates and productivity levels.
 Therefore, an increase in per capita GDP does not necessarily mean that
the economy is achieving development.
 Development occurs only if the increase in income is associated with
improvements in other standards of living (e.g.: reduced mortality rates,
lower illiteracy, better education, and increases in population’s life
expectancy).
 An increase in per capita GDP alone is a necessary but insufficient
condition to achieve development
 Sustainable development
 Development is sustainable if it “meets the needs of the present
generation without compromising the ability of future generations to meet
their own needs”. Yet, this “intergenerational” social justice is impossible to
achieve without government intervention.
 Social justice means providing equal opportunities of well-being, both
within and among generations, and this includes three aspects: economic,
social, and environmental aspects. Ignoring one of these aspects can
threaten economic growth as well as the entire development process.
 Hence, sustainable development must rest on the political will of the
government, to assure the fulfillment of intergenerational social justice.

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  The 3 aspects of Sustainable development are:
Economic aspect: Whereby economic activities are conducted in such a
way as to preserve and promote long-term economic well-being. In
practice, it aims to create a balance between economic growth, resource
efficiency, and financial stability, for example:
- Reducing consumption levels of energy and natural resources.
- Achieving financial stability at the macro level.
Social aspect: Involves a focus on the well-being of people and
communities, i.e., it’s about promoting equity, human rights, access to
education and health care, and decent work, that is reducing inequality
through addressing:
- Country's commitment to promoting policies and programs that address
crucial social issues such as poverty, gender equality, access to
education and health care, environmental sustainability, and other
social issues.
Environmental aspect: Involves the ability to preserve and protect the
natural environment over time through appropriate practices and policies,
meeting present needs without compromising the availability of resources
in the future. Achieving environmental sustainability through addressing:
- Factors that can have a significant impact on the ecological balance
and the planet's ability to sustain life (air, water and soil pollution;
climate change).

Now let's take an example; Greenhouse gases resulting from the development
process in some industrialized countries, led to the problem of global warming
and the threat of displacement of entire countries and generations; therefore,
the development achieved by these countries is not sustainable development as
it did not take into account the achievement of intergenerational social justice.

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According to the previous presentation, the most important current economic
issues that we will cover in this course are:
- Tourism development.
- Unemployment.
- The water crisis
- Energy.
- Inflation.
- Globalization.
- Climate change
- Food Security

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 Test your understanding
Multiple Choice Questions (MCQs):
1. In addition to increasing economic growth, sustainability is concerned with:
a. Efficient use of resources
b. Intergenerational social justice.
c. Improving quality of life.
d. All of the above.
2. Which of the following explains economic development?
a. Improvement in the technology used.
b. Improvement in production levels.
c. Improvement in the income distribution system.
d. All of the above.

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