Development Economics

What is 'Development Economics'

Development economics is a branch of economics that focuses on improving the economies of developing countries. Development economics considers how to promote economic growth by improving factors such as health, education, working conditions, domestic and international policies, and market conditions in developing countries. It examines both macroeconomic and microeconomic factors relating to the structure of a developing economy and how that economy can create effective domestic and international growth.

BREAKING DOWN 'Development Economics'

Development economics seeks to determine how poor countries can be transformed into prosperous ones. Strategies for transforming a developing economy tend to be unique because the social and political background of countries can vary dramatically. Some prominent development economists include Jeffrey Sachs, Hernando de Soto Polar, and Nobel Laureates Simon Kuznets, Amartya Sen and Joseph Stiglitz. In development economics, students and professionals create theories and methods that guide practitioners in determining practices and policies that can be used and implemented on the domestic and/or international level.

Mercantilism

Mercantilism was a dominant economic theory practiced in Europe during the 16th to the 18th century. It promoted augmenting state power by lowering exposure to rival national powers. Much like political absolutism and absolute monarchies, mercantilism promoted governmental regulation by not allowing colonies to transact with other nations. It monopolized markets with staple ports, banned gold and silver exports, did not allow the use of foreign ships for trade and optimized the use of domestic resources.

Economic Nationalism

Economic nationalism covers policies that focus on domestic control of capital formation, the economy and labor with the acceptance of the use of tariffs and other limits, and restrictions on the movement of capital, goods and labor. To an extent, economic nationalists do not agree with the benefits of globalization and unlimited free trade. As such, economic nationalism may adhere to import substitution and protectionism.

Linear Stages of Growth Model

The linear stages of growth model was used to revitalize the European economy after the second world war. It states that economic growth can only stem from industrialization. It also agrees that local institutions and social attitudes can restrict growth, specifically if these influence people's savings rates and investments. The liner stages of growth model portrays an appropriately designed addition of capital partnered with public intervention. This injection of capital and restrictions from the public sector lead to economic development and industrialization.

Other notable theories include the structural change theory, the international dependence theory and the neoclassical theory.

RELATED TERMS
  1. Endogenous Growth Theory

    An economic theory which argues that economic growth is generated ...
  2. Economic Conditions

    The state of the economy in a country or region. Economic conditions ...
  3. Developed Economy

    While there is no one, set definition of a developed economy ...
  4. Mainstream Economics

    A term used to describe schools of economic thought considered ...
  5. Neoclassical Growth Theory

    An economic theory that outlines how a steady economic growth ...
  6. Economic Growth Rate

    A measure of economic growth from one period to another in percentage ...
Related Articles
  1. Investing

    What is a Developed Economy?

    A developed economy is typically one with a high level of growth and security.
  2. Markets

    Evaluating Country Risk For International Investing

    Investing overseas begins with determining the risk of the country's investment climate.
  3. Markets

    Economic Growth

    Economic growth happens when the market value of the goods and services in an economy increase in one time period as compared to a prior time period.
  4. Markets

    Is Infinite Economic Growth on a Finite Planet Possible?

    While the finite nature of Earth's resources limits the direction of economic growth, it does not mean that infinite economic growth is impossible.
  5. Markets

    What's a Political Economy?

    Economics and politics are intrinsically linked. An economy is frequently one of the biggest points of contention between different political parties. And a political party’s ideologies will ...
  6. Markets

    Macroeconomics: Conclusion

    By Stephen Simpson Given the enormous scale of government budgets and the impact of economic policy on consumers and businesses, macroeconomics clearly concerns itself with significant issues. ...
  7. Markets

    The Difference Between Finance And Economics

    Learn the differences between these closely related disciplines and how they inform and influence each other.
  8. Trading

    Economic Factors That Affect The Forex Market

    Knowing the factors and indicators to watch will help you keep pace in the competitive and fast-moving world of forex.
  9. Markets

    Evaluating Country Risk When Investing

    The main risks of investing overseas are economic and political.
  10. Markets

    These Will Be the World's Top Economies in 2020

    Discover the current economic forces that are anticipated to significantly shift the landscape of the world's most powerful economies over the next decade.
RELATED FAQS
  1. Is France a developed country?

    Discover what qualifies France as a developed country and how its diverse economy has helped it become one of the largest ... Read Answer >>
  2. Is Colombia an emerging market economy?

    Learn the definition of an emerging market economy, and understand how Colombia, while not yet developed, meets the standards ... Read Answer >>
  3. What impact does economics have on government policy?

    Learn about the impact of economic conditions on government policy and understand how governments engineer economic conditions ... Read Answer >>
  4. What is the relationship between human capital and economic growth?

    Learn what human capital and economic growth are and how human capital is related to economic growth, and see examples of ... Read Answer >>
  5. What effect has globalization had on international investments?

    Learn how globalization impacts international investment and transforms economies around the world. Understand the implications ... Read Answer >>
  6. How does mercantilism impede global economic growth?

    Learn how mercantilism, a historical trade philosophy predating Adam Smith, dampens economic growth for protectionist nations ... Read Answer >>
Hot Definitions
  1. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  2. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  3. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  4. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  5. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  6. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
Trading Center