Introduction to Economics and Resource Economics
Table of Contents
INTRODUCTION TO ECONOMICS AND RESOURCE ECONOMICS:
ECONOMICS:
- [15th century. Directly or via French < Latin oeconomia < Greek oikonomia < oikonomos “steward of a household” < oikos “house” + nemein “manage”]
- “Economics, a social science concerned with the production, distribution, exchange, and consumption of goods and services”. _ (LoF)
- Economists focus on the way in which individuals, groups, business enterprises, and governments seek to achieve efficiently any economic objective they select.
- Standard economics can be divided into two major fields. The first, price theory or microeconomics, explains how the interplay of supply and demand in competitive markets creates a multitude of individual prices, wage rates, profit margins, and rental charges. Microeconomics assumes that people behave rationally. Consumers try to spend their income in ways that give them as much pleasure as possible. As economists say, they maximize utility.
- The second field, macroeconomics, deals with modern explanations of national income and employment. Macroeconomics dates from the book, The General Theory of Employment, Interest, and Money (1935), by the British economist John Maynard Keynes. His explanation of prosperity and depression centers on the total or aggregate demand for goods and services by consumers, business investors, and governments. Because, according to Keynes, inadequate aggregate demand increases unemployment, the indicated cure is either more investment by businesses or more spending and consequently larger budget deficits by the government.
RESOURCE:
A resource is something that is useful and valuable in the condition in which we find it. Things that are unknown or for which no uses have been found are not resources as they have no value. Similarly, the things although they are useful and available in such huge amounts relative to demand that they have no value; are not resources, so, the resource must be scarce and valuable.
RESOURCE ECONOMICS:
“It is the allocation of scarce resources in such a way so as to get the maximum benefit from it for the welfare of human beings.” _ (LoF) OR it is related to the allocation of scarce resources to various end fields in such a way that each user is maximum.
ECONOMIC DEVELOPMENT:
Development means to improve the quality of all humans or; a process in which the national income of a country increases over a long period of time, but that increase should be sustained, or; development means transformation from low income to a high-income society or; Economic development means an economy that can be produced to satisfy a growing population not only by enough food, water, and shelter to maintain life, but to satisfy other demands that are, or will be expressed by the people. _ (LoF)
The Developing Nations:
Using 1981 income data, the World Band divided the developing nations into two categories viz the low-income countries including 42 nations with incomes averaging above $405 per capita, while the 62 nations the middle-income countries are those with incomes averaging above $405 and up to somewhat over $5000 (IBRD, 1984). In contrast are the 21 countries, industrial market economies (the USA, with an average income of $12,820 per capita, was 12th) and the 8 oil-exporting economies having an average of $27,719 per capita. The fifth group of nations is the 8 east European non-market economies, including Russia.
For the present purpose, the low-income group poses a major problem. There are 32 nations still below $405 average per capita income eg China and India which make together nearly half the world’s population. It means that much of the world is pitifully poor.
In addition to low income developing nations like Pakistan, tend to share certain of the following features: developing nations have low rates of capital accumulation. Low income means low savings and savings are the main sources of investment capital. We have also higher population growth rates, considerably higher than those of the industrial, market-oriented countries.
Most of the people living in the developing countries gain their living from agriculture nearly always more than 50% and sometimes as much as 80%. In Pakistan, 70% of the population depends on agriculture, characterized by a high rate of unemployment in both rural and urban areas which decreases the per capita income.
Pakistan and other developing nations are characterized by high illiteracy rates and a low level of technology as well.
A lack of natural resources is not a characteristic of developing nations eg Indonesia and Brazil. Pakistan is undoubtedly among the richest in terms of natural resources. This richness is often contrasted with that of Switzerland, a highly industrialized nation that has virtually no stock of many important natural resources but an average per capita income of $17,434.
The requirement for Development:
It is fairly easy to describe the common characteristics of developing nations. There is far less agreement on the basic requirements for economic development.
- Capital is usu a high place in the needs for developments, without capital there is little hope for building a modern industrial society, so we should increase our capital by increasing our savings, to build a modern industrial society.
- Managerial ability and entrepreneurship are also considered important factors.
- Partly because technical knowledge is also needed, education is also an important factor, so we should improve our literacy rate.
- Political stability is believed a prerequisite, without this, there will be little investment from either internal or external sources.
- A will to develop is often included in the requirements.
ROLE OF FOREST IN ECONOMIC DEVELOPMENT:
Forests provide timber, fuelwood, and other minor produce and play an important role in economic development.
- Economic development simply means increasing our per capita income, and using the knowledge of forestry we can increase our income by;
- Growing fast-growing spp
- Improving social forestry to solve fuelwood and fodder problems.
- Using the agroforestry system
- Improving the marketing of forest products
- Producing more technical people.
- Reducing wastage of forest products.
For corrections and improvements, please use the comments section below.
Cover photo courtesy: ECAT Environmental Magazine from Dubai Municipality by Maritza VARGAS
Hello Mr. Naeem,
I am Maritza VARGAS, the author of the photo you are using in your article. I am very glad you liked it and use it, however it was published on ECAT environmental magazine from Dubai Municipality. So, please I would appreciate if you could please write clearly the reference and of course, my name as the author of the diagram.
Thanks
Maritza