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Stages of development of economic thought

What is the economy

Economics is defined as how money is organized and society's trade and industry are organized, and scientific methods are addressed in order to understand how scarce resources are exchanged around society.

Economists in the business school also study the theories and techniques of developing policies in government in order to lift the veil of the prevailing ignorant about the methods of industrialization of efficiency today.

There is another definition of the concept of economics, which was issued by the American economist Thomas Lewis, which states that economics is the study of the relationship between cause and effect.

How did economic thought develop?

  • traditional society

In traditional regions and societies there are two obstacles which are either that modern science and advanced technology are not widely available or they are not being worked on and applied as basic approaches.

Despite this, there is the possibility of the availability of practical applications employed specifically for these innovations. The expansion and increase of production is also related to the expansion of the available space.

There are also several changes in the composition of both the internal and external trade. The scope of the traditional society is distinguished in that any individual product can reach a certain level that cannot be exceeded. The agricultural field enjoys the availability of a large number of resources that are made available for it.

  • Prerequisites for take off

Which includes a significant period of about a century or more than a century in which the preconditions for taking off are determined, and these conditions contain the main changes that occur in both the social, political and economic fields, including :

  • Attempting to change society's thinking and direct it towards science and risk in order to earn money and profits.
  • The ability of the workforce to deal with situations and adapt to them.
  • political sovereignty.
  • Development of the tax system and financial institutions.
  • Establishing some public and economic facilities, for example, railways and educational institutions.

  • take-off period

It is a very important period, which is about two to three decades, during which economic growth is directed to be able to develop on its own in one way or another, and this period is marked by an increase in investment rates significantly, which results in an increase in the output of the individual.

This is followed by fundamental changes in production and disposal techniques through the expansion of the volume through higher investment rates and a rise in per capita output as a consequence. For any expected population increase, the second thing is to shorten the specified period so that economic characteristics or wealth can emerge, and the third thing is the sustainability of economic growth.

  • Driving to maturity 

The full capital of the individual increases following the development of the economy, where the speed of the primary primary industries slows down as a result of the decline in returns, and it is possible to maintain the same average growth rate through the succession of new sectors with continuous growth, and the foreign trade sector undergoes a comprehensive change from the roots.

  • The era of high mass consumption

The average per capita income increases to a large percentage during this period and this percentage includes covering basic needs that include clothing, housing and food need. This stage is represented in the private economy of the United States of America, the United Kingdom, West Germany and Japan, and India is still in the second stage.

characteristics of economic thought

  1.  Wealth-producing thought : This thought is concerned with the creation of wealth. Wealth is produced through productive ideas, and either this is for the consumption of the family and to meet the needs of its members or for the sake of others. Also, the farmer can cultivate his land and produce vegetables and agricultural crops that benefit the family or return to him in return for a fee. By selling it in the commercial market, which brings back to the farmer a good financial return that benefits from it [2] .
  2. Providing the needs and desires of individuals : the goal of the mentioned economic activities is to meet the needs of individuals, which are likely to be either at present or future needs, in the event that a person gets a special job through which he can obtain money and thus he will use it to meet his personal needs The needs of the family, as well as the person can save the money gained at the present time and save it to be used at a later time in the future or after retirement from work. This is one of the future plans to meet the individual’s need.
  3. Money Income: All known economic activities fall within the scope of work, service or profession that are used to obtain and earn money. Individuals engage in these professions in order to obtain money in order to meet the needs of the family and satisfy their desires through productive activities, thus enabling them to live and live life in a manner Natural through the revenue from productive business activities.
  4. Developmental activities : The current economic activities are not only working to meet the needs of individuals and families, but they also include participation in the development and development of the economy of the community. Needs follow from old to new to newer as soon as the old needs expire, and what is new appears, and thus the economic resources are used in order to obtain The benefit of this process is not limited to the financial return of the individual only, but it benefits the community by providing job opportunities for young people, and the more economic activity increases and its development expands, the greater the social development of this region.

The importance of economic thought

  •  Learning decisions : Economists expect information and matters about companies and governments, and this economic knowledge , or what is known as economic intelligence , is closely related to data and model formation [3] .
  • The impact of the economy: the economic impact pours into our daily life, which includes some jurisdictions, including taxes, inflation, interest rates, economic wealth, inequality, emerging markets, energy, as well as the environment .
  • Impact of industries : Companies of all sizes or industries are affected and depend heavily on the economy in terms of searching for products, working on developing them and pricing methods , as well as how to promote and advertise products. This indicates the importance of the economy, as it provides wide and different career options in various fields. The economy has its various sectors, which are represented in agriculture, manufacturing, banking and consulting services.
  • Inspires business success : After realizing how consumers behave is vital to adequate business success, theories help economists and models predict behavior and inform business strategies, an example of how big data can be analyzed.
  • International Perspective : The impact of economics reaches our living world in the ways that economics offers an understanding of local as well as international perspectives, ancient and modern, and enlightened perspectives on how other cultures and societies might interact.

Also, an understanding of the economy in general is an essential and key factor that can lead to the desired success .


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