Branch of social science that deals with the allocation of resources, production, distribution, and consumption of goods and services
Branches of economics
Macroeconomics
Microeconomics
Economic factors
Land (natural resources)
Labor (manpower)
Capital (goods produced used as resources)
Entrepreneurship (act of organizing)
Key concepts of economics
Opportunity cost
Marginal benefit
Marginal cost
Efficiency
Incentive
Exchange
Market
Theory
Development economics
Study of how economies are transformed from stagnation to growth, from low income to high income status
Absolute poverty
Being unable to meet minimum level of income, food, clothing, healthcare and other essentials
Reasonstostudyeconomics
Concerned with economic, cultural and political requirements for effecting rapid structural change in a manner that will efficiently bring the fruits of economic development to the masses
To help people understand developing economies in order to help improve the material lives of the majority of the global population
Scopeofdevelopmenteconomics
Traces the current state of developing nations, from what they have and what they have not, and apply the theories of development applicable to each
Povertyequilibrium
Poverty itself maintains the forces that lead to its perpetuation
The structure of third world economies
Size of the country (geographic area, population, and income)
Historical and colonialbackground
Endowments of physical and human resources
Relativeimportance of its public and private sectors
Nature of its industrial structure
Degree of dependence on externaleconomic
Distributionofpower and the institutional structure
Characteristics of the developing world
Lower levels of living and productivity
Lower levels of human capital
Higher levels of inequality and absolute poverty
Higher population growth rates
Greater social fractionalization
Larger rural population
Low levels of industrialization
Adverse geography
Underdeveloped financial
Lingeringcolonialimpact
Indicators of development
Income
Health
Education
Human Development Index
Socioeconomic measure based on income per capita, education, and health
Institution
Economic institutions are humanly devised constraints (norms, rules of conduct)
Gross National Income
Total domestic and foreign output claimed by residents
Less Developed Countries
Other term for developing countries
Traditional economics
Approach to economics that emphasize utility, profit maximization, market efficiency, and determination of equilibrium
Attitude
States of mind or feelings of an individual
More Developed Countries
Economically advanced capitalist countries
Freedom
Society has disposable a variety of alternatives to satisfy its wants and individuals enjoy real choices
Development
Process of improving the quality of life
Functioning
What people do or can do with commodities of given characteristics
Developing Countries
Characterized by low level of living
Structure of developing nations
Size of country including geographic area, population, etc.
Characteristics of developing world
Higher level of inequality and absolute poverty
Poverty
Condition in which a person or community lacks the financial resources and essential needs
Globalization
Increasing integration of national economies into expanding international markets
Values
Qualities, principles or standards that a society or groups within it considers worthwhile/desirable
Income per capita
Total gross national income of a country divided by the total population
Social system
Organizational and institutional structure of a society, including its values, attitudes, power structure, and traditions
Capabilities
Freedom that people have given their personal features and their command over commodities
Gross Domestic Product
Total final product of goods and services produced by a country's economy within the country's territory
Indicators of development
Health
Education
Subsistence economy
Economy in which production is mainly for personal consumption and standard of living
Political economy
Attempt to merge economic analysis with practical politics
Linear stages theory
Development undergoes stages of growth in achieving development
Advocated by the American economic historian Walt W. Rostow, according to him there is a series of steps that is undergone by a country in achieving growth and this is called "takeoff into self-sustaining growth"
Important factor is having a sufficient fund, done through the mobilization of both foreign and domestic savings
Harrod-Domar growthmodel
Functional economic relationship in which the growth rate of gross domestic product (g) depends directly on the national net savings rate (s) and inversely on the national capital-output ratio (c)
GDP (Gross Domestic Product)
Summation of all final goods and services produced by a country for one year
Capital-output ratio
Ratio that shows the units of capital required to produce a unit of output over a given period of time
Net savings ratio
Savings expressed as a proportion of disposable income over some period of time