Econ 3392 (Fall 2017)

Answer

Economic Growth and Economic Development

Introduction

Economic growth refers to the quantitative change in the Gross Domestic Product (GDP) of a nation. Economic development on the other hand, is qualitative and quantitative changes in the economy which is proven by; increase in human capital accumulation, infrastructural improvements, reduction of gender parity, political stability, and safety among others (Dellink et al., 2017). is paper analyses briefly the concept of economic development and economic growth, with a focus on establishing as to whether development overlaps to freedom and expansion capabilities. In addition, the paper focuses on the development path for Paraguay since 2006.

Analysis

As has been defined earlier, economic development is interested in the qualitative changes in the lives of the individual citizens of a nation. This is unlike economic growth which is more quantitative. According to Korres, Kourliouros and Michailidi (2017), while growth in the Gross Domestic Product (GDP) of a nation is an important indicator of economic development, its accuracy in terms of evaluating the real living standards of the citizens is questionable. This due to the fact that the computation process of the  value of goods and services produced in a nation during a particular year (GDP computation) uses the nominal values and not the real values. Development is defined by economists as a transition process through which the state of an individual is changed. Development is said to be a deliberate choice by a nation. The choice of development should, therefore, be evident in terms of the steps taken towards realizing this vision. The steps taken by a nation that has chosen to develop on the other hand will define the expansion capabilities. Economic scholars argue that development path is defined by the choice that a nation hence having no restriction. This is at times referred to as economic development.

Economic development and expansion capabilities are evaluated through the variations evident in the economic variables.  Some of the specific variables that are used in determining the expansion capabilities of a nation include; inflation rates, interest rates, accumulation of human capital among others. It is ,therefore reasonable to say that the concepts of development overlap to development freedom and expansion capabilities. In order to conclude make a conclusion as to whether or not a nation is developed, its ability to provide the basic requirements to its citizens must be evaluated. The more the effective ways of providing  the  basic needs, the larger the economic expansion limit. This is due to huge savings that the citizens will have hence having more wealth to save and invest. Besides autonomous consumption will also be minimized.

 Other than provision of the basic needs of the citizens, improvement in governance and gender equality and environmentally sustainable production methods are also an indication of development in a nation. Gender equality comes as a result of civilization which to a great extent depends on globalization. Globalization on the other hand entails integration amongst the various nations of the world which can only be effective if the expansion capabilities of the two nations tally (Grandville, 2011).  Civic freedom just like gender equality also is influenced by the level of integration and cooperation among the various states. Civilization which is part of civic freedoms is dependent on the economic variables such as education levels, access to infrastructure such as internet among others. These factors are economic development. Environmental sustainability ,on the other hand, comes with financial implications and efficient strategies which can only be associated with economic development.

While it is true that the development concepts overlap to development freedom and expansion capabilities, the same is debatable. Development path is defined as the phases that a nation undergoes for it to realize its full potential in terms of improving the living standards of its citizens. The cycle or the phases that are followed in order to realize the full potential is defined (Parker, 2006). This ,therefore, annuls the term ‘‘economic freedom.’’ In addition to this, certain economic scholars argue that development of an economy comes before expansion capabilities. With a positive variation in the economic variables, an economy is said to be developed. It is worth to note that developed countries have a larger expansion capabilities as compared to less developed countries.

Development Path for Paraguay between 2006 and 2017

As had been defined earlier, development path is the phases that a country undergoes for it to realize its vision of improving the living standards of its citizens. Development of a nation to a great extent depends on the political goodwill of a nation. Paraguay has had independence since 1811. Despite this, the country has not exhausted its development path (Parker, 2006). The country has immigrants from the various parts of the globe which makes its civilization levels very high.  Before the year 2006, the country heavily depended on agricultural production. This has since changed to hydroelectric power generation. Other than this, the country has for enjoyed political stability that has ensured proper usage of the various resources it has. In the year 2012 for instance, the poverty levels in Paraguay was reported by the World Bank as 16%. Though this has not dropped significantly due to a persistent reliance on agriculture, the development elements such as education, safety among other have increased.

Conclusion

Based on the above analysis, is possible to conclude that development concepts overlap to development freedom and expansion capabilities. Countries that have a vision of developing their economies, therefore, appreciate this fact by taking economic development paths that will transform their economy wholesomely.