Question

Fabulous discussion so far, the examples that you guys provided about the decisions that you had to make are great and diverse, and surely demonstrate the dilemma of scarcity and unlimited wants (utilities), as well as the dilemma of weighing costs against current or future actual (or perceived) benefits when making choices.

The society as a whole in any given country faces similar challenges due to the fact that each society has limited resources but has unlimited wants. As strange as it might sound, when countries go to large scale wars, such as WWI and WWII for example, one of the main changes in their “production” is the increase in the production of children, as well as war materials- tanks, planes, bombs, etc. During peace time and economic progress, people produce less children and the opportunity cost of having a child typically rises (more jobs for women with high pay means higher cost of having a child and/or being a stay at home mom). In such, societies alter their production process (production possibility frontier) as the resources and the wants of their people change.

Pick either a country/region outside the United States or a state, a region, or a city within the United States and discuss what is the major good or service that country, region, state, or city produces and why.

Also, what are the challenges that county, region, state, or city faces given its current resources.

Answer 1

I would like to share an example of a country in South Asia, where i come from "India".

India with it's huge population and resources have faced the similar issues, in India after the independence in 1947 there were few industries in the country, which produced consumption goods, the share of agriculture in the economy was well over 50% both in terms of employing labor and production. Because the cost of capital was much higher compared to labor. Which prompted the average citizens to increase their source of income, by increasing the production of children. In the 80's and the 90's the marginal productivity in agriculture started dipping which in turn decreased the labor wage. At this point India came up with a liberalization policy which allowed foreign companies to invest in India in terms of hardcore physical capital and financial capital, as the cost of capital started decreasing more firms entered India and set up Industries and service sector for the first time in India both services and Industries took the lead in terms of their share in the GDP, and agriculture was last in terms of production value. The large scale Industries demanded more skilled labor and women work force, now for the first time in India both men and women were seen working simultaneously as the work was required less labor and more intellect. This forced families to have fewer production of children. And which in turn pushed the wages up and services related to child such as education and health, and increased the cost of having children higher. This is an example where economic growth in the peace-time can prompt societies to alter their production process.

Today India faces the problem of stagnant growth and the risk of being stuck in the Middle Income trap, from the likes of Brazil and Argentina. India needs to up skill its youth population for future changes in the employment types and conditions.