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The political economy of development
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social science that seeks to analyze and describe the production, distribution, and consumption of wealth.


No one has ever succeeded in neatly defining the scope of economics. Economists used to say, with Alfred Marshall, the great English economist, that economics is "a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing"--ignoring the fact that sociologists, psychologists, and anthropologists frequently study exactly the same phenomena. Another English economist, Lionel Robbins, has more recently defined economics as "the science which studies human behaviour as a relationship between (given) ends and scarce means which have alternative uses." This definition--that economics is the science of economizing--captures one of the striking characteristics of the economist's way of thinking but leaves out the macroeconomic approach to the subject, which is concerned with the economy as a whole.

Difficult as it may be to define economics, it is not difficult to indicate the sort of questions that economists are concerned with. Among other things, they seek to analyze the forces determining prices--not only the prices of goods and services but the prices of the resources used to produce them. This means discovering what it is that governs the way in which men, machines, and land are combined in production and that determines how buyers and sellers are brought together in a functioning market. Prices of various things must be interrelated; how does such a "price system" or "market mechanism" hang together, and what are the conditions necessary for its survival?

These are questions in what is called "microeconomics," the part of economics that deals with the behaviour of such individuals as consumers, business firms, traders, and farmers. The other major branch of economics is "macroeconomics," in which the focus of attention is on aggregates: the level of income in the whole economy, the volume of total employment, the flow of total investment, and so forth. Here the economist is concerned with the forces determining the income of a nation or the level of total investment; he seeks to learn why full employment is so rarely attained and what public policies should be followed to achieve higher employment or more stability.

But these still do not exhaust the range of problems that economists consider. There is also the important field of "development economics," which examines the attitudes and institutions supporting economic activity as well as the process of development itself. The economist is concerned with the factors responsible for self-sustaining economic growth and with the extent to which these factors can be manipulated by public policy.

Cutting across these three major divisions in economics are the specialized fields of public finance, money and banking, international trade, labour economics, agricultural economics, industrial organization, and others. Economists may be asked to assess the effects of governmental measures such as taxes, minimum-wage laws, rent controls, tariffs, changes in interest rates, changes in the government budget, and so on.