Economic Growth and Economic Development

Economics is the social science which teaches us how to make optimum use of scarce resources. The economic system adopted by various countries can be capitalism, socialism and mixed economy. Each economy has to take three important economic decisions which are:

• What to produce?
• How to produce?
• For whom to produce?

In capitalism these economic decisions are taken by private contractors and are motivated by profit considerations. The consumer is supposed to be the king of the capitalist economy. Only products manufactured as required by consumers. Manufacturers use these materials and to adopt production methods that will reduce their production costs. Goods will be developed for consumers who have a real demand. The success of the capitalist economy depends on competition between different economic entities. In the absence of competition, the capitalist economic system can lead to monopolistic exploitation of consumers.

In the socialist economy, the three major economic decisions are taken by the State or Government and guided by public or community organizations or welfare in their decision making. The mixed economy is the combination of capitalism and socialism, in order to reap the benefits of the two economic systems and to eliminate or avoid their weakness.

We live in the border less world economy characterized by privatization, liberalization and globalization. So there are some international economic organizations dedicated to making transparent international trade by reducing and eliminating tariff and nontariff barriers to international trade.

Some other international economic organizations and contribute to helping developing countries and LDCs to implement economic development programs and social welfare. The ultimate goal is to promote sustainable development that respects the environment, increase opportunities for productive employment, improve living standards, eradicate poverty, hunger and illiteracy, and increasing production and trade.

But what we find today is that all the noble aims and efforts of developing countries face huge problem with the unequal distribution of income and wealth. There has been economic growth in terms of increasing the gross national product and gross income per capita, but that economic development is not well done. If you look at the skills, employment opportunities and living standards in developing economies of the world, so there is still much to do and achieve. The unequal distribution of income, when combined with high inflation is a problem for the majority of the population in developing countries.

The price increase is a necessity, like food and consumer goods to reduce the real income of consumers alter their savings and reduce their standard of living. The only solution is to increase the food grains, the development of irrigation systems to implement modern farming techniques and to eliminate counterfeiting of accumulation, speculation and black marketing. Economic development is not so important for economic growth.