Article by Gregg Forscher
Economics as a subject is more than 200 years previous dating backward to the publication of Adam Smiths Book entitled, An Enquiry into the Nature and Causes of Wealth of Nations. In 1976, economics was not acknowledged as a freestanding branch of acquiring. Adam Smiths book presented first orderly study of economics. It conducted to the recognition of economics as a freestanding subject of study. That is why, Adam Smith is mostly known as the father of economics.Since then economics has been defined otherwise in dissimilar stages. The set of definitions given by dissimilar economists can be split into the following categories:
1. Wealth definition given by Adam Smith
2. Welfare definition given by Prof. Alfred Marshall
3. Scarcity definition given by Prof. Robins
4. Growth definition given by A. Samuelson
Out of these, the most important definition is the scarcity definition given by Prof. Robins. In his book, an essay on nature and significance of economic science published in 1932 Prof. Robins has given the scarcity definition of economics as:
Economics is a science that studies human behavior as a relationship between ends & scarce means that has alternative uses.
This definition of economics give by Prof. Robins is based on the following 3 assumptions.
1. Human wants are unlimited i.e. as soon as one taken is fulfilled another need arises and sometimes even before the fulfillment of first need.
2. The means or resources necessitate to fulfill the human desired are limited and as such all the needs can not be fulfilled.
3. Scarce resources have alternative uses, that is, they tin be put to different uses or they tin be put to more than one use.
In general, we can say economics is about making choices in the presence scarcity. Scarcity and choices are important in economics. Study of the Choice Problem at single, social, interior and international level is what economics is all about.
Types of EconomiesNow, you are clear with the definition of economics. Let us study the types of economies. There are 3 different types of economies:
1. Developed Economy2. Underdeveloped Economy3. Developing Economy
1. Developed EconomyDeveloped Economy refers to that economy where the level of national income and the per capita income is very high as well as high production, consumption, savings and investment. As a result, people living in developed economies have a higher standard of living, e.g. U.K, USA, Australia, Canada, etc. are examples of developed economy where people have a very high standard of living.
2. Underdeveloped EconomyUnderdeveloped Economy is one where the level of income and the per capita income is very low. The reason for low national income and per capita income is either the unavailability of sufficient resources or under-utilization or non-utilization of resources on account of low level of technology. This situation results in low capital formation and technical development resulting in poor standard of living in the economy. According to a report, 2/3rd of the population falls under the underdeveloped economy.
3. Developing Economy Developing economy is one where the per capita income and the national income are neither too low nor too high. In other words, a developing economy has a rising per capita income and national income. Such an economy, utilizes its resources and with the use of modern technology tries to achieve a higher economic growth rate. People living in developing economy enjoy better living of standard as compared to underdeveloped economy, e.g. India is a developing economy that has a lot of natural resources but due to absence of improved technology, these resources remain unutilized.
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