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Unformatted text preview: Economy One can safely say that the field of study of economics is economy. But what is an economy? Looking around, one may feel like saying that an economy is the collection of farms, factories, workshops, mines, shops; roads, railways, ships, aeroplanes, pipelines conveying gas and oil or even water; offices, banks, schools and colleges; cinema, theatre and opera houses; and dispensaries and hospitals. They all produce goods and services, which have economic value and are consumed directly or indirectly by the people. This view of the economy is simple, descriptive and straightforward. It should be acceptable. However, there are people who point towards the variety of usage of word ‘economy’: national economy, world economy, and international economy; village economy, rural economy and urban economy; slave economy, feudal economy, capitalist economy and sot economy; even household economy. What is the common feature in all these definitions of economy? Erudite scholars point out that it is actually a set of relationships, which could be abstracted from, to a large extent, from other forms of social relationships. These relationships manifest in use of labour power and provisioning of material needs. An attempt has also been made to define economy as a structure of relationships among a group of people in terms of the manner in which they exercise control over resources, use of resources, and labour for production of goods and services and define and settle the claims of the members over what is produced. Modern Economic Growth Human societies have been increasing production by using natural resources in more productive manner, improving production techniques, producing more and more and more varied goods and services and living better lives. But there might have been long periods when some societies actually declined. There might have been periods when increase in population exceeded the growth in quantum of goods and services (In good old days, goods might have meant foodstuff — foodgrains and other eatables). Per capita product might not have had a sustained increase. Population too might not have had sustained increase. The history of last two hundred years in the West is, however, considered to be peculiar. This is the period when population had sustained increase. But increase in quantum of goods and services exceeded that in population. As a result, there was sustained increase in per capita product (as well as in per worker output). The same could be said about the last fifty years in the case of many so-called developing countries. Here too, population rose more rapidly than it did in the West in any stretch of fifty years. But total quantum of goods and services rose still faster. As a result, there was sustained increase in per capita product....
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This note was uploaded on 04/20/2010 for the course CEDT 601 taught by Professor Ypr during the Spring '00 term at Indian Institute of Technology, Kharagpur.
- Spring '00