Classical Theory of Economic Development

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Economic development and growth are not new concepts. They have their roots in the past. The World-Wide Depression (1929-33) and the Second World War (1939-44) were the two historic events, that compelled the nations all over the world to think seriously about the problems of economic development. The study of economic development is one of the most exciting and challenging branches of the broader disciplines of economics and political economy. It is worth noting that economic development is not considered as the economics of advanced capitalist nations nor the economics of centralized social economies. It is the economics of contemporary poor and underdeveloped nations with varying ideological organizations, diverse cultural backgrounds, and very complex yet similar economic problems that usually demand new ideas and novel approaches.  

A number of factors have affected this change and upsurge of interest in economics of development and the economies of the poor countries, which are in some way inter-related with one another. First, in the wake of the great depression of 1930s and the aftermath of the Second World War, there was a renewed academic interest among professional economists in the theory of growth, development and planning. Second, the poor countries themselves have become aware of their own backwardness, which has led to a natural desire for more rapid progress. Third, the absolute number of poor are considerably greater than was in the past, and a greater awareness has strung the humanitarian chord. Fourth, the growing recognition by all concerned of the mutual interdependence between countries in the world economy, which has been due to globalization making all countries more vulnerable to shocks and financial crises. 

The scope and the opportunities for research and policymaking in economics of development and growth are tremendous. There are government institutions, research bureaus, think tanks, and several other organizations that look for graduates in economics who are enthusiastic about working with them, and bring the best combination of traditional theory and practical approach to solve the problems of the world. Every year, several students decide to pursue degree course in economics and enroll themselves into college or university, with an aim to specialize in development economics and contribute their bit to add prosperity to the society. 

The team of economics assignment help experts at Archlite thought of sharing with you the classical theories in development economics that marked the beginning of its proper study. Through years of experience in the field of writing, with an in-depth knowledge about the subject, and a clear understanding of the concepts, our team has written briefly about some of the classical theories that you should know about. The classical school consists of Adam Smith, David Ricardo, and Thomas Malthus. Their approach to economic development was macro in character. Now, without further ado let’s take a read! 

  • Adam Smith’s Theory
    According to his theory, the main determinant of economic development is capital formation, which depends upon savings. Laissez-faire policy helps in maximizing output and savings. Also, the division of labor and specialization increase the productivity and widen the extent of market, which induces growth. He believed that economic development is a gradual and a cumulative process leading to the emergence of a stationary state.
  • David Ricardo’s Theory
    Ricardo’s ideas were primarily concerned with income distribution and foreign trade. His theory formulates certain interrelations among capital, population and output. On the basis of these relations, it traces the course of rent, wages, and profits over time. Then ultimately it come down to an eventual advent of a stationary state which is explained in terms of falling rate of profit.
  • Thomas Malthus’ Theory
    Also known as the Theory of Population suggests that population increases in a geometric ratio and the means of subsistence increase in an arithmetic ratio. The imbalance between population growth and food supply would lead to per capita income hovering around subsistence level. According to him the solution to the population problem was practicing preventive and positive checks.

We hope that this post either helped you increase your knowledge about the basics of this subject or it helped you revise and revisit the theories you must have studied in the past. Pursuing a degree in economics is not a child’s play. There are so many different concepts to understand, theories to remember, keep up with the latest developments in the subject, and understand the application of economics in the dynamics of the real world. Students work day and night to complete their assignments in time as well as finish the curriculum for exams. All of this sometimes gets too much too handle, and the students are not able to get the grades they desire. Have you been struggling the same way? Whatever may be the reason, if you’re having trouble keeping up with the assignments, then you should take economics assignment writing service offered by Archlite. 

The writers working here have years of experience and in-depth knowledge about the subject at hand. They can work on any topic pertaining to economics no matter how tricky it is. That is the reason why so many students trust our services and are never disappointed. So, what are you weighing up? Take assignment writing services from us and be ready to thrive in academics. We are just a call away! 

 

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