Economic Development (Meaning and Explanation)

We explain what economic development is, its characteristics and the factors that define it. Also, liberalism and protectionism.

What is economic development?

Economic development can be defined as the capacity that countries or regions have to produce and obtain wealth. Development is linked to livelihood and economic expansion in a way that ensures well-being, maintains prosperity and meets the personal or social needs of people.

economic development arises with the advent of the capitalist mode of production which implies an increase in the rates of profit that allow the accumulation of capital. These leaps in quantitative accumulation are caused by several factors that can be combined: cost reduction, incorporation of more productive techniques or machines, overexploitation of labor forces, among others.

Features of economic development

Economic development is achieved from a series of economic, social and political scenarios:

Increase in GDP per capita Developed countries have a high gross domestic product due to the production and marketing of goods and services. GDP per capita is one of the indices that is taken into account for the analysis of a country's development. This index measures the total income of a country in relation to the number of inhabitants.
Basic needs covered Developed countries distribute income so that all inhabitants have their basic needs covered. In these countries, unemployment rates are usually low. There is almost total access to services such as water, electricity and gas.
Development of productive capacity Developed countries use resources and take advantage of them. Many of these countries focus on industrialization and the service sector.
Respect for human rights and social order The societies that make up developed countries are usually made up of individuals satisfied with their quality of life. There is respect for democracy and institutions.
Use of new technologies Countries with greater economic development introduce new technologies to promote rapid and efficient production.
Access to health and education Economic development allows us to strengthen and guarantee access to health and education for the entire population.
Investment development Economic development generates the favorable climate for taking credits and investments.
Sustained growth Economic development is achieved with economic growth and human and social development. They tend to be long processes that, once achieved, can extend over time.
Economic and social changes Economic development brings about equal opportunities for the entire population and this generates social mobility.
Development of solid institutions The sustained development of a nation generates respect for democracy and a low rate of corruption in the political and social spheres.

Factors of economic development

economic development characteristics technology — Technological factors are key in the development of economies.

There are a series of factors that are taken into account when measuring the economic development of a certain country or region.

On the one hand, it is important to keep in mind that economic development does not only imply economic growth, but is based on indicators such as: life expectancy, access to education and factors that contribute to the human and social development of individuals.

Production factors They are those elements that make up the economic aspect. Land, capital, work and business management are some of the factors that are part of the production chains. Economic growth is measured from these factors.
Technological factors They are those technologies and techniques that are key in the development of economies. In recent decades, technology has allowed the optimization and streamlining of processes.
Factors that contribute to human development They are those elements that allow economic growth to be differentiated from development. The social and economic progress of a country depends, to a large extent, on the situation of its inhabitants. Economic growth does not guarantee an equitable distribution of income. The employment rate, access to education and health, the minimum wage, are some of the factors that determine the development of a country.
Political and social factors They are those political, social and religious institutions that play a key role in the political, social and economic life of a nation. The way in which these types of institutions exercise power and their degree of transparency and social awareness are key to the economic development of a country.

Economic growth and economic development

Economic growth is a necessary condition for a country or region to experience economic development, but it is not the only factor that must be taken into account.

The growth must be accompanied by improvements and advances in the style and quality of life of the inhabitants. There must be changes in social, political and economic matters so that this economic growth is translated into the economic development of the country.

Access to services, health and education, that is, the guarantee of basic needs covered, is key when understanding development. Economic development must seek sustained economic growth over time to improve the quality of life of the population.

The analysis of these factors in certain countries is carried out by the United Nations through the creation of the Human Development Index. There, the gross domestic product per capita, life expectancy and the literacy rate, among other factors, are measured.

Examples of economic development

economic development examples norway — Norway is considered the most developed country in the world.

Norway It is considered the most developed country in the world. It has one of the highest GDP per capita. It is one of the largest oil producers. Access to health and education is public. It has a stable political system, low levels of corruption.
New Zealand It is one of the countries with the greatest economic development, with a high GDP per capita and equitable access to health and public education.
Swiss It is one of the most developed economies in the world. It has a high GDP per capita, a low unemployment and inflation rate, and a highly developed tertiary sector of the economy.

Economic development in Mexico

Mexico It is ranked 76th in the United Nations Human Development Index ranking. This index takes into account the Mexican GDP per capita, but also other data such as life expectancy, average access to education, and employment conditions. These economic and social factors are the indicators of economic development.

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Mexico has one of the largest economies in the world, with sustained economic growth in recent years, although There is still a fight to reduce economic and social inequalities.

As in many countries in the world, Mexico advocates a more balanced distribution of income that covers the basic needs of all inhabitants, to reduce the gap in the distribution of wealth and regional disparity.

Liberalism and protectionism

There are two main ways to understand the history of economic development:

Liberalism (Free market)

Liberalism is a school of thought that defends individual freedoms and grants a passive role to the State.

It seeks free individual action so that business production is established in a commercial and competitive manner. It also defends free commercialization, private property, the development of international trade and free enterprise.

We can understand the French Revolution as the point at which individual freedom was established, which allowed free action to produce and private property.

Protectionism

Protectionism is an economic doctrine that has a different conception of the role of the State with respect to liberal ideology. It is based on protectionism and economic intervention by the State through public policies that act with the objective of avoiding the concentration of wealth and aims at equitable distribution.

protectionism seeks to favor national production over imports of foreign goods and services.

Continue with: Neoliberalism