You hear a lot about the importance of economic growth, but only recently have people begun to question . All these imperfections have resulted low level of output and low rate of productivity per worker. This has forced the gross output of these countries for less than the potential output. Moreover, weak and corrupt public administration in these countries has been resulting a huge leakage of public fund meant for investment in developmental activities. Economic progress is very much associated with the spread of education. The following are some of the important obstacles or constraints on the path of economic development of underdeveloped countries: In the initial part of their development process, most of the underdeveloped countries were under foreign domination which had led to the huge colonial exploitation by the foreign rulers. What make a country grow and develop might refer to few major aspects, like business systems, technology issues, political issues, etc. efficiency across countries and help in the development of underdeveloped countries. The production possibility curve AB represents the production frontier which shows the various combinations of commodity A and B that may be produced by the country to its maximum extent through its fuller and best possible allocation of resources. An enterprise contributes to increasing the Gross Domestic Product (GDP) and income per resident, which results in economic growth. If the ratio of the working-class population and the scopes of jobs are in balance, you can expect the economy of a country is well balanced. Due to abundant labour supply and scarcity of capital, such technologies become unsuitable for these countries. Thus the vicious circle of poverty is resulted from various vicious circles related to demand side and supply side of capital. Finally, peoples participation and public co-operation in all developmental projects are considered as an important pre-requisite and a principal force behind all planned developmental schemes of the under-developed countries. In respect of changes in the contribution of services sector, the result is not so marked or consistent among the various countries. Economic Growth and Economic Development 2. It is a system of industry and trade, worldwide that has commenced because of globalization. Listed below are the ways in which governments can use taxation in a modern economy:-. Following are some of important economic and non-economic factors determining the pace of economic development in a country: Population is considered as an important determinant of economic growth. The process of economic globalization has already begun. (2) Propensity to apply science to economic ends. The suitable investment criteria should maximise the social marginal productivity and also make a balance between labour intensive and capital intensive techniques. One of the most talked about economic indicators for the U.S. is real GDP (gross domestic product). Ed.). The global economy is important as it affects the micro and macro levels of the, world economic growth. Business systems of the nation defined the direction of the country toward the world economy. Global economy has many positive and negative effects. Thus in order to attain economic development at a suitable rate, the Government of the country should make a choice of suitable investment criteria for the betterment of the economy. Thus by the term economic development we mean a process so as to raise the per capita output with a scope for equitable distribution. Thus it is quite important to raise the rate of capital formation so as to accumulate a large stock of machines, tools and equipment by the community for gearing up production. Moreover, the structural transformation of the economy indicates a shift away from agriculture to non-agriculture activities and from industry to services along with a change in the scale of productive units, and necessary shift from personal enterprises to impersonal organization of economic firms along with a change in the occupational status of labour. Production Possibility Frontier Market imperfections in the form of immobility of factors, price rigidity, ignorance of market conditions, rigid social structure etc. Again the investment should be made to attain a balanced growth of different sectors of the economy. Source: Faculty of Business Studies, 2010. The Importance of economic analysis - UK Essays Developing countries tend to rely on the progressive nations for Economic Growth and Economic Development 2. To be a strong power in the world, a country needs to be industrially advanced too. The path of economic development in an underdeveloped economy is full of hurdles or impediments. From the perspective of exporting firms and their governments in lower-income countries, finding ways to do more business with relational buyers has great potential for increasing profits and supporting firm growth. Fairness concerns. Secondly, the production frontier, i.e., the various productive sectors, has to be widened through sizable changes to the maximum extent. The tourism is important for economic development of a country because it bring large number of tourists in a country and also holds an instrument in promoting international relations. By capital-output ratio we mean number of units of capital required to produce per unit of output. What are its positive and negative effects? (a) Use of technological progress far economic gains, (b) Application of applied sciences resulting in innovations and inventions and. The processes of economic development should not only generate increased or enhanced means of production but it should also make room for equitable distribution of such resources. Prof. Spengler has listed about nineteen determinants but Rostow mentioned six propensities having much bearing on economic growth. After independence, these underdeveloped countries like India had to face serious obstacles to break this deep rooted impasse of low level equilibrium traps. In this connection, Prof. Schultz has rightly observed, To achieve economic growth of major importance in such countries, it is necessary to allocate effort and capital to do three things: increase the quantity of reproducible goods, improve the quality of the people as productive agents and raise the level of productive arts.. Economics is concerned with helping individuals and society decide on the optimal allocation of our limited resources. They bring new skills, ideas, innovations, and perspectives that contribute to economic growth. 2. Obstacles or Constraints 4. Another pre-requisite for economic development of an underdeveloped country is the attainment of reasonable equality of income. Uploader Agreement. This literature review also highlights the complex interplay of factors that impact immigrants' ability to contribute to economic growth. What Is The Importance Of Economic Development And | 123 Help Me Essay # 1. These modes of living in most under-developed countries have had in the past little direct connection with economic development. Firstly, the productive opportunities available within the existing resouirce and necessary known-how have to be utilised to the maximum extent through optimum allocation of the resources of the country. While explaining the distinction between economic development and economic growth, C.P Kindleberger observed, Economic growth means more output and economic development implies both more output and changes in the technical and institutional arrangements, by which it is produced., As per this view, the term growth implies higher level of output as well as achievements in terms of increase in the volume of economic variables. Get a verified expert to help you with Importance of country's economic system. Structural Changes during Economic Development: Essay on the Meaning of Economic Development, Essay on the Determinants of Economic Development, Essay on the Obstacles or Constraints on the Economic Development, Essay on the Pre-Requisites or Need for Economic Development, Essay on the Structural Changes During Economic Development. Underdeveloped countries are also suffering from lack of adequate number of entrepreneurial ability. Taxation has a key role in a modern economy. markets that are developing economically, making them one of the main engines of Prohibited Content 3. Prof. Simon Kuznets has rightly observed that during the period of modern economic growth, the share of agriculture and agro-based industries in aggregate output (GDP) has recorded a sharp decline, while the shares of manufacturing industries, public utilities and certain service groups like professional, government etc. Vicious circle in the underdeveloped countries represented by low productivity is resulted from capital deficiency, market imperfections, economic backwardness and poor development. projections based on the models of demographic trends and capital productivity, the Here the idea is not only to determine the rate of investment but also the composition of investment. (Gerard J. Tortora), Theories of Personality (Gregory J. Feist), The Tragedy of American Diplomacy (William Appleman Williams), Calculus (Gilbert Strang; Edwin Prine Herman), Conceptual Framework and Accounting Standards (Conrado T. Valix, Jose F. Peralta, and Christian Aris M. Valix). to the increasing number of international transaction characteristics of banks, industries, 1.1 What Is Economics, and Why Is It Important? Not only because of it tends to provide foods for the entire population of a country but agriculture helps to connects and interacts with all the related industries of that country. Why is the global economy important? At the same time the existing poor technology of these underdeveloped countries fails to raise the rate of productivity and also to bring them out of the vicious circle of poverty and thereby makes it uncompetitive. Research that compares the experiences of a wide range of developing countries finds consistently strong evidence that rapid and sustained growth is the single most important way to reduce poverty. Despite these many benefits, many undeveloped countries' overdependence on donations and aid became a disadvantage of the globalized economy. Agriculture dominates the economy of most of the underdeveloped countries like India as it is contributing the major share of their GDP. The share of total labour force engaged in industrial sector varied between 40 to 58 per cent for almost all the countries excepting erstwhile USSR and Japan, as these countries entered lately in the field of industrialisation. In any society economic growth would be possible only through the introduction of improved technical inputs into the process of economic transformation. It is also very important for the common people of a nation to have a good understanding of economics. Prof. W.A. Moreover, market imperfections results factor immobility, under-utilisation of resources and thereby abstract sectoral expansion and the process of development. The first essay is a long essay on Indian Economy of 400-500 words. both physical capital and human capital. Foreign capitalists mostly invested their capital on mining, oil drilling and plantation industries where they exploited the domestic workers to the maximum extent and remitted their profit to their parent country. Global economy also influences the world In this respect population is working both as a stimulant as well as hurdles to economic growth. By technological advancement we mean improved technical know-how and its broad- based applications. However, the factors that lead to immigrants' contributions to economic growth are complex and multifaceted. These markets show development and flexibility which is a, positive manifestation for the world economy, projections based on the models of demographic trends and capital productivity, GDP in emerging market economies in 2019 are expected to keep increasing at a, Global economy has many positive and negative effects. UNU-WIDER : Blog : Why should I care about economic growth? The fundamental problem of economics is said to be scarcity - the idea that wants (demand) is greater than the resources we have. So, education plays pioneer role for the creation of human capital and social progress which in turn determines the progress of the country.. Economic development is thus a process of raising the rate of capital formation, i.e. Importance of economics | Essay and speech Free trade, increased, migration of the labour force which can help in reducing unemployment in a certain, area, and increased economies of scale and labour are just some of the benefits we can, infrastructure developments that leads the developed countries to restrain development, affecting a country's economic growth rate. Thus necessary change in the social structure is very important for attaining economic development in a country. get from the global economy. Attainment of economic development in a country is very much related to social attitudes, political conditions, human resources, and also very much depending on psychological, social culture and political requirements of the country itself. Plato wrote: "If a man neglects education, he walks lame to the end of his life." Let's delve into the concept of scarcity a little deeper, because it is crucial to understanding economics. The Importance of Economics Readers Question: What is the Importance of Economics? Obstacles or Constraints 4. Modern economic growth has resulted a fall in the domination of sole trading small farms. Importance of country's economic system - New York Essays The Role Of Taxation In An Economy Economics Essay Here capital means the stock of physical reproducible factors required for production. Developing countries tend to rely on the progressive nations for infrastructure developments that leads the developed countries to restrain development affecting a country's economic growth rate. With proper human capital formation, increasing mobility and division of labour, manpower resources can provide useful support to economic development. Thus with the increase in capital accumulation in such countries, the supply of other co-operant factors should be increased so as to enhance the capital absorption capacity of such countries. (c) Utilisation of innovations on a large scale. An economic essay is focused on educating, assist in decision making and inform the reader. Accordingly, higher rate of population growth can put serious hurdles on the path of economic development Moreover, growth of population at a higher rate usually eat up all the benefits of economic development leading to a slow growth of per capita income. With the advancement of technology, capital goods became more productive. Essay on Tourism [ Benefits & Importance of Tourism for a Country ] Capital Formation and Capital Accumulation: Capital formation and capital accumulation are playing an important role in the process of economic development of the country. (a) An increase in the volume of real savings, (b) Establishment of proper credit and financial institutions for mobilising and channelising these savings into investible fund and. Finally, social system has much impact on the economic phenomenon of the country. They have also destroyed the cottage and small industries by adopting unfair competition which has put a huge pressure on agriculture, disguised unemployment and poverty. The importance of relationships in global trade | Yale Economic Growth They contribute to new products and services and develop new markets which grow an economy. Essay on Indian Economy for Students and Children The attainment of such higher social marginal productivity of investment requiresminimising the capital-output ratio, promoting greater external economies, investment in labour-intensive projects, use of domestic raw materials, reducing pressure on balance of payments and improving the pattern of distribution of income and wealth so as to reduce the gap between the rich and poor. 3. In order to attain economic progress, people must be ready to bear both the sufferings and convenience. Pre-Requisites or Need 5. the opportunity to specialize in the resources they have in their area. What Is GDP, and Why Is It Important? The economic essay helps countries to manage their resources as they are scarce. On the other hand, higher rate of growth of population increases demand for goods and services as a means of consumption leading to increasing consumption requirements, lesser balance for investment and export, lesser capital formation, adverse balance of trade, increasing demand for social and economic infrastructural facilities and higher unemployment problem. Moreover, the rapid change in the size and form of business organisations has also resulted a major structural change in the economy. As A.G.B. Increased national output means households can enjoy more goods and services. The external factors which are playing important role in sustaining the economic development include: (a) Growing export earnings for financing increasing import bills required for development, (b) Increasing flow of foreign capital in the form of direct foreign investment and participation in equity capital and. As stated by the financial and economic This is a simplified version of Harrod-Domar Model. But the economy of underdeveloped countries is now facing serious threat from large scale disorder, terrorism, disturbances in the international border etc. It is because of scarcity. Jacob Viner stated in this connection, Population growth in a backward country does not induce capital widening investment or innovation. Therefore, they must take proper steps, viz., introduction of compulsory deposit schemes, curtailing the conspicuous consumption, putting curbs on imports of consumption goods, inflow of foreign capital etc. Although agriculture has its own importance and provides the basic necessities of life, but it alone cannot take a . Attaining higher level of economic development is a function of level of technology. Inflation in these countries is influenced by the factors like monetary expansion, deficit financing, misdirection of savings in unproductive speculative activities, market imperfection: etc. 1 500+ Words Essay on Indian Economy. What are its positive and negative effects? Economics Essays: The Importance of Economics 1.2 The Rise of the Industrial Sector. Microeconomics The study of resources on an individual and company level. These markets show development and flexibility which is a Prof. Gadgil also observed, All attitudes, habits of mind, patterns of behaviour, are born out of chiefly historical institutional modes of living. Lewis, there are three principal causes of economic development. Prof. Lewis, in this connection, rightly observed, The proximate causes of economic growth are: the effort to economise, the increase of knowledge or its application in production and increasing the amount of capital or other resources per head. put severe obstacle on the path of economic development and also retards its pace. $35.80 for a 2-page paper. Thus the underdeveloped or developing countries are facing several constraints or obstacles to its path n economic development. Moreover, rapidly rising population necessitates a higher rate of investment to maintain old standard of living and per capita income. This equation shows that rate of growth of GNP is directly related to savings ratio and inversely related to capital-outlet ratio. Thus AB represents the potential production curve. However, an economy having deficiency in natural resources is forced to depend on foreign country for the supply of minerals and other raw materials in order to run its industry. Lewis observed, Popular enthusiasm is both the lubricating oil of planning and the petrol of economic developmenta dynamic force that makes all things possible.. Moreover, under such a chaotic situation, capital formation process, business initiatives and enterprise of private firms are seriously suffered and distorted leading to a stagnation of economy in these countries. The Political Economy of Economic Policy - IMF F&D positive manifestation for the world economy. these three causes, through clearly distinguishable conceptually are usually found together.. Inspite of having huge variety of natural resources, countries of Asia and Africa could not attain a higher level of development due to lack of its proper utilization. Under such a situation, the rate of investment in these countries is very low leading to low level of capital formation and low level of income. This vicious circle operates not only on demand side but also on supply side. Moreover, due to the lack of spirit of experimentation and proper Research and Development (R&D) facilities, these underdeveloped countries fail to transform their production system to the desired level. The Importance Of Taxation In Economic Growth - 2836 Words | Cram It also refers to productivity of capital of different sectors at a definite point of time. Too much dependence on agricultural sector is not an encouraging situation for economic development. GDP in emerging market economies in 2019 are expected to keep increasing at a Extent of the market is also considered as an important determinant of economic development. In this connection, Prof. H.W. (c) Utilisation of these savings for the purpose of investment in capital goods. worldwide that has commenced because of globalization. Thus immediate steps be taken to raise the rate of capital formation of the country. 1.1 will clarify the situation. A whole hearted effort should be made to utilise its available limited resources in a most efficient and dynamic manner to its maximum extent. 1. An indicator that measures growth is things like GDP, which measures the value of all final goods and services produce within domestic country in one year. But with the gradual growth of domestic savings in the subsequent years of development, the dependence on foreign capital must gradually be diminished.

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