Economic Developement

Ch-16

In general, economic development is usually the focus of federal, state, and local governments to improve our standard of living through the creation of jobs, the support of innovation and new ideas, the creation of higher wealth, and the creation of an overall better quality of life. Economic development is often defined by others based on what it is trying to accomplish. Many times these objectives include building or improving infrastructure (such as roads, bridges, etc.), improving our education system through new schools, enhancing our public safety (fire and police service), or incentivizing new businesses to open a location in a community.

Economic development often is categorized into the following three major areas:

Governments working on big economic objectives such as creating jobs or growing an economy. These initiatives can be accomplished through written laws, industries' regulations, and tax incentives or collections.Programs that provide infrastructure and services such as bigger highways, community parks, new school programs and facilities, public libraries or swimming pools, new hospitals and crime prevention initiatives.Job creation and business retention through workforce development programs to help people get the needed skills and education they need. This also includes small business development programs that are geared to help entrepreneurs get financing or network with other small businesses.

Mixed economy:-A mixed economy is an economic system that is variously defined as containing a mixture of markets and economic planning, in which both the private sector and state direct the economy; or as a mixture of public ownership and private ownership; or as a mixture of free markets with economic interventionism. Most mixed economies can be described as market economies with strong regulatory oversight and governmental provision of public goods. Some mixed economies also feature a variety of state-run enterprises.

In general the mixed economy is characterised by the private ownership of the means of production, the dominance of markets for economic coordination, with profit-seeking enterprise and the accumulation of capital remaining the fundamental driving force behind economic activity. But unlike a free-market economy, the government would wield indirect macroeconomic influence over the economy through fiscal and monetary policies designed to counteract economic downturns and capitalism's tendency toward financial crises and unemployment, along with playing a role in interventions that promote social welfare.Subsequently, some mixed economies have expanded in scope to include a role for indicative economic planning and/or large public enterprise sectors.

Socialist economy:-It refers to the economic theories, practices, and norms of hypothetical and existing socialist economic systems.

A socialist economic system is based on some form of social ownership of the means of production, which may mean autonomous cooperatives or direct public ownership; wherein production is carried out directly for use. Where markets are utilized for allocating inputs and capital goods among economic units, the designation market socialism is used. When planning is utilized, the economic system is designated a planned socialist economy. Non-market forms of socialism usually include a system of accounting based on calculation-in-kind or a direct measure of labor-time as a means to value resources and goods.[1][2]

Price mechanism:-Price mechanism is an economic term that refers to the manner in which the prices of commodities affect the demand and supply of goods and services.

Socialist system:-A socialist economic system is based on some form of social ownership of the means of production, which may mean autonomous cooperatives or direct public ownership; wherein production is carried out directly for use. Where markets are utilized for allocating inputs and capital goods among economic units, the designation market socialism is used.

Capitalist system:-Capitalism is an economic system and a mode of production in which trade, industries, and the means of production are largely or entirely privately owned. Private firms and proprietorships usually operate in order to generate profit, but may operate as private nonprofit organizations.Central characteristics of capitalism include private property, capital accumulation, wage labour and, in some situations, fully competitive markets.In a capitalist economy, the parties to a transaction typically determine the prices at which they exchange assets, goods, and services.

Market mechanism:-Market mechanism is a term from economics referring to the use of money exchanged by buyers and sellers with an open and understood system of value and time trade-offs to produce the best distribution of goods and services.

Capitalist system:-

Capitalism is an economic system and a mode of production in which trade, industries, and the means of production are largely or entirely privately owned. Private firms and proprietorships usually operate in order to generate profit, but may operate as private nonprofit organizations.Central characteristics of capitalism include private property, capital accumulation, wage labour and, in some situations, fully competitive markets.In a capitalist economy, the parties to a transaction typically determine the prices at which they exchange assets, goods, and services.

Market mechanism:-Market mechanism is a term from economics referring to the use of money exchanged by buyers and sellers with an open and understood system of value and time trade-offs to produce the best distribution of goods and services.

The use of the market mechanism imply in a free market; there can be captive or controlled markets that seek to use supply and demand, or some other form of charging for scarcity, both in social situations and engineering. This is a main term when it comes to marketing in economics. In this, we have three types of economy free market economy, command or planned economy and mixed economy. In free market economy, all the resources are allocated by private sector (individuals, households, and groups of individuals); in planned economy, all the resources are owned by the public sector (local and central government); and, in mixed economy, the resources are owned by both private and public sector. Resources are allocated according to the forces of demand and supply, and this is known as market mechanism.

Price mechanism:-Price mechanism is an economic term that refers to the manner in which the prices of commodities affect the demand and supply of goods and services. Price mechanism affects both buyers and sellers who negotiate prices of goods or services.A price mechanism or market-based mechanism refers to a wide variety of ways to match up buyers and sellers through price rationing.

An example of a price mechanism uses announced bid and ask prices. Generally speaking, when two parties wish to engage in a trade, the purchaser will announce a price he is willing to pay (the bid price) and seller will announce a price he is willing to accept (the ask price).

The primary advantage of such a method is that conditions are laid out in advance and transactions can proceed with no further permission or authorization from any participant. When any bid and ask pair are compatible, a transaction occurs, in most cases automatically.

Effects of the price mechanism:-Price Mechanism causes many changes in the economic environment. If there is an increase in demand, then prices will go higher causing a movement along the supply curve.An example of price mechanism in the long term is the oil crisis during the 1970s.

The crisis caused more nations to start producing its own oil due to dramatic price increases of oil. Since more nations started to produce oil, the supply curve shifted more to the right meaning there was more supply of oil.

Price Mechanism affects every economic situation in the long term. Another good example of price mechanism in the long run is fuel for cars. If fuel becomes more expensive, then the demand of fuel would not decrease fast but eventually companies will start to produce alternatives such as biodiesel fuel and electrical cars. Price mechanism is a system by which the allocation of resource and distribution of goods and services are made on the basis of relative market price.

BY:Manan popat ,

Manav shahClass: 10-c