Economic development in itself is a complex concept. There are multiple ideas at work in the phrase “Economic Development”. So defining the phrase thoroughly will take multiple steps. As a business owner, or an adult with finances, understanding economic development can lead to an understanding of its place in the world. Economic exercises on the macro-level such as this are fantastic for learners. Frequently, the basic concepts behind large-level economics translate well to the local level.
What is Economic Development
Economic development is an improvement to a country or business which increases its ability to make money.
For a business, economic development is usually very straightforward. If a company makes improvements they believe will increase its ability to make money it is likely economic development. Hiring more employees or making more products available to customers can be economic development.
A country’s economic development, then, is most frequently related to how many people in that country are working and making money. Countries with high GDPs like the United States, Japan, or France experience high rates of economic development. This is because these countries have many trade routes and profitable companies. It is fairly common for a country to release GDP data over a set amount of time (quarterly or annually). Then, comparing those two GDP totals can either reflect economic growth or shrinkage. Looking at an economic development example is a natural next step.
Economic Development Examples
There are types of economic development examples, but let’s begin with a business. Imagine a business that makes and distributes soap. This company is responsible for both the machines that manufacture the soap and prep it for export. They process the raw materials and refine them for export, so there are many potential ways for this business to develop. Perhaps the business changes its supplier to a competitor with a better rate. Perhaps they will increase their number of employees. Perhaps they build a new warehouse so they can store more products at once. Any of these examples count as economic development.
Economic development, then, is not actually tracked through money. Economic development is marked by choices that could make money in the future. So this means a project meant for economic development can still lose money. If that soap company’s plan to change suppliers fails, the plan was still made for the sake of economic development.
Now, let’s consider an economic development example when a country’s development is not directly tied to its monetary valuation. When the United States reopened diplomatic relations with Cuba, they planned to reopen trade with the country. Now, at that moment of declaration and hand-shaking, there is no new money traded. But the potential for more trade brought on by the agreement counts as economic development. In practice, economic development is often the result of world events that meaningfully change a country’s ability to make money. These economic development examples show one thing. A country must make a change to the way they make money to have economic development.
Economic Development as a Learning Tool
None of us are likely to be responsible for a national economy any time soon. But understanding economic developments are tools in your own business and economic education. Knowing a good economic development definition is a great way to grow as a business owner. These lofty examples may sound distant from any business ventures in your own life. But the fluctuations in the GDP value of a country can easily mirror those of your household or business with some artful reduction.