• Sunday October 17,2021

Economic development

We explain to you what economic development is and what are the different conceptions that seek it. Free market, and state intervention.

The countries pursue economic expansion in different ways.
  1. What is economic development?

Economic development can be defined as the ability to produce and obtain wealth, and this can be both at the level of personal development and also applied to countries or regions. Either in one or another case, development is linked to livelihood and economic expansion in a way that guarantees well-being, maintains prosperity and satisfies people's personal or social needs.

Economic development arises with the advent of the capitalist mode of production, which implies an increase in the rates of profit that allow the process of capital accumulation. These quantitative accumulation jumps are caused by several factors that can be combined as cost reduction, incorporation of more productive techniques or machines, on the exploitation of the work forces

There are not only internal factors but also external factors, for example in the case of the economic development of a nation, the international context of high profit rates or external investments. The rational economic thinking of public policies aims to sustain the level of growth, for this there are institutional regulations carried out in order to encourage and promote the efficiency of the productive system.

There are two main ways to understand the history of economic development, which led to the global scenario where we live today, the liberal conception and the protectionist conception.

See also: Human Development.

  1. Liberal Conception (Free Market)

The liberal conception required the working class forced to sell its labor force.

There is on the one hand the liberal conception, according to which the industrial and capitalist development that began with the industrial revolution produced an advance in the production and reproduction of capital. This accumulation of capital was developed motivated by free trade and by rational thinking in search of profit .

This economic process required individual free action to establish business production in a commercial and competitive manner, and also needed the training of the working class that was forced to sell its labor force in the market, free marketing, property private, the development of international trade and free enterprise.

We can understand the French revolution as the point at which individual freedom was established that allowed free action to produce ; and private property, without it, there would be no possibility to begin a process of capital accumulation and investment.

Commercial activity is thus based on competition between private parties and ownership. The current global scenario is the product of actors in the international market that are dedicated to industrial production and financial investment, based on rational positivist thinking that considers progress as an objective. The weakest point of this liberal conception is economic imbalance and inequality .

  1. Protectionist Conception

The Industrial Revolution initiated a process of capital accumulation.

The second vision of understanding economic development has a different conception of the role of the state, it is based on protectionism and economic intervention by the nation state through public policies that acted for the purpose of avoiding the concentration of wealth and equitably distributing the product to guarantee decent living standards, destitution, misery and with this, equality of possibilities.

This vision includes that the industrial revolution initiated a process of capital accumulation and distribution of the world, industrial central areas achieved development through exploitation, expropriation and allocating a secondary role based on the production of raw materials to the other areas, such as Latin America and Africa.

This process of original accumulation begins with the mercantilists of the fifteenth century, who exterminated the indigenous indigenous population in search of appropriation of marketable land and precious metals according to their Economic market concept.

The appropriation of the capitalist class is what drives the process of capital appropriation. Internationally there was what is known as the division of the world, between producers industrial areas of progress and economically dependent areas delayed .

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