Question

In your opinion what is the main source for development?  MAKE YOUR ANSWERS AS DETAILED AS POSSIBLE. INCLUDE BOTH THEORY, POLICY AND YOUR INTERPRETENTIONS WITHIN THE ANSWER.

Answer 1

Economic development is something which has economist tied up into research and development of various theories which they believe is the best method of achieving the goals of any country. It is defined as the gradual increase in living standards and capital resources in a country which allows for better quality of life, production levels and increased customer satisfaction in any economy such that the final value of goods and services produced in a country which is also called as gross domestic product rises substantially.

In my opinion, the constant source of economic development is the concept and theory of capitalism which focuses on making sure that the consumers are the king in any market. The concept of capitalism is based on the fact that the prices of goods and services can be set in by the forces of demand and supply, and government intervention in the markets is minimum. This means that taxation and tariffs on imports can be limited and exports can be extended to all parts of the world with the same ideology.

It allows for a country to produce only those goods and services which remain high in demand within the economy and due to the same consumption also remains high which pushes production and employment opportunities. The living standard of the country begins to experience a significant change and people and their life styles become better. They utilize higher production towards ensuring that they get maximum profit margins, the consumers get products and services at a higher innovation level and wages are also increased.

In simple terms, allowing capitalism in a country would mean that the production would be limited to only those goods which are high in demand. The allocation of resources then is limited to those goods only and is constantly improved by companies so as to beat competition in the market place. The consumers benefit from the higher quality goods which are sold at prices which they mutually desire and it extends their welfare. Also, the increase in production levels causes a shift in living standards and the government can limit itself to administrative role rather than take part in the economy as a producer. This saves time, and makes sure that administration is relatively better.

We have examples of countries such as India and China which were previously opposed to the idea of capitalism and were protectionist in their approach towards managing their countries the period between 1960-1990's largely changed this in their country and their growth story is for everyone to see through which they have been able to earn double digit growth rates for themselves.

Please feel free to ask your doubts in the comments section if any.