What Is Development Economics?
Development economics is a branch of economics that focuses on improving fiscal, economic, and social conditions in developing countries. Development economics considers factors such as health, education, working conditions, domestic and international policies, and market condition with a focus on improving conditions in the world's poorest countries.
The field also examines both macroeconomic and microeconomic factors relating to the structure of developing economies, and domestic and international economic growth. Macroeconomics refers to broadly influencing factors such as interest rates, whereas microeconomics relates to individual influences.
Development economics also examine both macroeconomic and microeconomic factors relating to the structure of developing economies, and domestic and international economic growth.
Development Economics Explained
Development economics studies the transformation of emerging nations into more prosperous nations. Strategies for transforming a developing economy tend to be unique because the social and political backgrounds of countries can vary dramatically.
Students of economics and professional economists create theories and methods that guide practitioners in determining practices and policies that can be used and implemented at the domestic and international policy level.
Some aspects of development economics include determining to what extent rapid population growth helps or hinders development, the structural transformation of economies, and the role of education and health care in development. They also include international trade and globalization, sustainable development, the effect of epidemics such as HIV and AIDS, and the impact of catastrophes on economic and human development.
Prominent development economists include Jeffrey Sachs, Hernando de Soto Polar, and Nobel Laureates Simon Kuznets, Amartya Sen and Joseph Stiglitz.
Real World Example – Mercantilism
Mercantilism was a dominant economic theory practiced in Europe from the 16th to the 18th centuries. The theory promoted augmenting state power by lowering exposure to rival national powers.
Like political absolutism and absolute monarchies, mercantilism promoted government regulation by prohibiting colonies from transacting with other nations. Mercantilism monopolized markets with staple ports and banned gold and silver exports. It did not allow the use of foreign ships for trade, and it optimized the use of domestic resources.
Economic Nationalism as an Example
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.
Example of the Linear Stages of Growth Model
The linear stages of growth model were used to revitalize the European economy after World War II.
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. The linear stages of growth model portray an appropriately designed addition of capital partnered with public intervention. This injection of capital and restrictions from the public sector leads to economic development and industrialization.