Development economics is a branch of economics that deals with improving the economies of developing countries. The discipline aims to establish strategies that apply to different developing countries based on their unique social, political and economic factors. Development economics also explores the unique challenges facing developing countries, thus helping to analyze the opportunities available in these countries and how they can be applied. Development economics uses economic theory, econometric methods, political science and demography in its approaches.
History of development economics
Development economics as a discipline first appeared in the 1950s. However, earlier theories pointing to this discipline began as early as the 17th century with the rise of the nation-state. These approaches included commercialism and economic nationalism. The 1950s saw development thanks to the efforts of theorists such as WW Rostow who suggested that economic growth went through five linear processes. These processes include mainstream society, preconditions, takeoff, maturity, and mass consumption. Currently, the discipline receives a lot of attention and plays an important role in research for development.
Areas of relevance
Development economics is often applied in efforts to eradicate poverty, achieve the Millennium Development Goals (MDGs) set by the United Nations (UN), democratic governance, sustainable environmental and energy policies, as well as crisis prevention and recovery.
Development economics is applied to the formulation of strategies aimed at improving the economic situation of developing countries. In doing so, they help to bridge the ever-growing gaps between the poor and the rich in many countries. This economic development is achieved through the application of economic and political theories in the analysis of present and past economic developments as well as the possible opportunities that can be exploited and the methods to use these opportunities for the benefit of the country.
Benefits of using development economics
Development economics offers a more comprehensive view and understanding of the economic, political and social impacts, as well as influences on the economic state of a country. In addition, it examines areas that can be improved, such as infrastructure, education, health and technology, which are essential for positive economic growth through the empowerment of people. In addition, economic development examines the macroeconomic and microeconomic factors related to the structure of the developing country and how the country can create both domestic and international growth.
Criticisms of development economics
Measures used to quantify economic development progress have been criticized for their inability to include smaller, but significantly important economic activities, such as housekeeping and housing construction, which are not listed in financial transactions. Therefore, this loophole is likely to distort a country’s economic position because economic progress is measured in financial terms. Fraud and the lack of data on financing also undermine the efficiency of calculating a country’s gross domestic product (GDP).
Development economics in practice
The United Nations Development Program (UNDP) has applied development economics to try to help developing countries improve their economic situation by helping them strategize and analyze growth trends. The UNDP program works through women’s empowerment and gender equality, poverty reduction, sustainable environmental management, disease eradication and treatment, as well as strengthening partnerships for cooperation between rich and developing countries to achieve the Millennium Development Goals.
Strengths of development economics
The most important and significant aspect of economic development is the realization that the economic development strategies to be applied are not found in predefined formulas, but differ according to the political, economic and social factors affecting a given economy. This awareness is important in developing tailored growth strategies that will best serve the economy in question.