In the past, survival was the only aspect that humans were concentrated on, each step taken in the past was to ensure the survival of oneself and the descendants. This changed following the industrial revolution, as tools and machines were invented to carry out daunting tasks for us, our focus shifted from survival to quality of life. Presently, we are able to enhance the quality of life because our food and essentials are taken care of, thanks to economic development.
What is Economic Development?
Although economic development often gets confused with economic growth, in the former, the overall quality of life is increased within a nation, whereas economic growth means an increase in goods and services. In the past, the word, ‘economic development’ was often substituted for modernization; however, presently, it is used to represent a poverty reduction.
Reasons for economic development
1. Natural Resources
Natural resources are a crucial aspect of determining the future of economic growth, ultimately leading to economic development. It’s not surprising to see countries with an abundance of natural resources have a good quality of life. Take Dubai for example, a few decades ago, it was nothing but a barren land; however, since the discovery of oil in 1958, it has become one of the most economically strong nations in the world, all because of its natural resource. Granted, natural resources don’t work all the time in terms of economic growth. Most African countries are resource-rich; however, colonization and exploitation of these nations have only brought their economy to the ground. Between these two extremes, natural resources certainly make economic development easier.
Trading is easily one of the oldest means of exchanging goods and services that have been occurring among people. Unsurprisingly, trading in ancient times used to be unregulated; however, in modern times, the state heavily interferes with this process and continuously introduces trade policies. While it benefits a specific group of people, it causes great loss to others. Therefore, deregulation of trade is essential to develop the economy. Moreover, each developed nation of today was able to grow its economy because of free trade. The United States, for example, the leading nation when it comes to trading, became a superpower only after it allowed free trading.
Although the first industrial revolution started the true economic development, it was the third industrial revolution that gave rise to technology, and with it, economic development was sped up. This is because technology boosts the entire infrastructure, from the production of goods to supplying of products. Additionally, technology has also made conducting business and advertising easier. Countries with access to the latest technology are always ranking top in the list of most economically developed countries, as is the case with Germany and Japan. Despite both nations being ruined following the Second World War, both rose to prosperity, largely thanks to their technological advancements.
Education is essential in each aspect of life, and that is not a secret; however, when it comes to economic development, education can grow or sink an economy in the long run. While the previously mentioned aspects are important for economic development, it cannot happen if the workforce has no clue what to do. Ensuring that the public has access to a good education will result in enhanced economic development. Perhaps the best example of this is India, 4 decades ago GDP of India was $193 billion, whereas today it is $2.6 trillion. The only reason behind this is education, India has become one of the largest IT hubs in the world. Moreover, if people were not educated, unemployment rates would have soared, and a majority of them would have resorted to crime.
Infrastructure is what connects all the aspects mentioned before to grow an economy. Not only that, but it also makes economic growth quicker. A well-designed manufacturing plant ensures efficient production. Additionally, once the good roads and rail networks are established, the movement of both finished goods and raw materials becomes easy, resulting in efficient supply. Since more products can be distributed quickly, it also increases the size of the market. As the size of the market expands, it attracts investors, further strengthening the economy, and resulting in economic development. For example, China is renowned to offer a significantly cheaper manufacturing cost than other countries, alluring large corporations to establish their production plants in China. All of this has been made possible because of a carefully designed infrastructure.