Economic Developement

Running Head : ECONOMIC DEVELOPMENT

Economic Development

Name

Institution

Economic Development

1 ) Redistribution and Growth in GDP Par Capita

Economic development can hardly be achieved through income redistribution . Among several reasons include fact that poor countries have little funds for that purpose . Attempts to increase distributable funds through taxation or any other means could leave the society even worse off . In addition , the widespread poverty in these countries can hardly be controlled through redistribution policies the amount received by individual citizens writhing under poverty might not help much

in overcoming their plight . Poor nations that take this route therefore take longer in achieving the desired economic growth

Economic growth through gradual improvement in GDP par capita is the surest way of taking a society from destitution to prosperity . This approach enables individuals to take part in the process of improving their lives with minimal reliance on the state . Knowing that rewards of enterprise would accrue to the producing individual leads to increase in respective individuals ' efforts . The entire society thus embarks on upward GDP growth that improves overall standard of living . The role of the state in this approach is to provide enabling environments for individuals to embark on reducing poverty in best ways they know how

2 ) Knowledge and Endogenous technological innovation

The application of knowledge and technological innovation in societies provide strong foundation for continued economic growth through generations . Currently , developed countries have applied the two tools in their economic development processes , which have resulted to even higher living standards . This is in consideration that more education and access to technological know-how is directly collated with economic productivity witnessed in developed nations . People become more productive as less time is used on each in tasks individuals are left with more time that get dedicated to innovation , which fosters further growth

Developed nations have greater access to education and technology which explains their continued economic growth . On the other hand , the struggling economies have lesser of the two tools , which have resulted to economic stagnation for generations . Developing institutions that aid in access to education and fosters technological innovation is therefore a requirement that developing nations cannot afford to ignore . On the other hand , the economically struggling countries can access the technology developed in prosperous country and therefore foster development in their respective economies

3 ) North 's Economic Development Puzzle

Douglas North , the Nobel Laureate institutional economist , has highlighted reasons for disparities in economic growth among nations His central theme holds that economically prosperous nations have set proper institutional frameworks of political economy , which poor nations have historically failed to adopt (North , 1998 . These institutions have enabled respective economies be friendly for individuals to participate in the production process . North states that successful institutions are the ones that provide institutions with lower transaction costs (North 1997 . This results to increased competitiveness between societies

The institutions developed in respective economies hugely depend on local practices and belief systems . Indeed , it is from these systems that societies develop institutions that aid participation...