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OL22E35
ASSIGNMENT 1_GROUP 5
ASSIGNMENT #1
1.
What criteria should be used to allocate capital between alternative projects? How important
are information and other technology in economic development?
- The chief executive officer of a corporation selects where and how to spend the money that the
company has earned through capital allocation. Capital allocation refers to how a company's financial
resources are distributed and invested in order to boost efficiency and profits. Alternatively, the
company may opt to invest in growth initiatives, which could include acquisitions and organic growth
expenditures. In economics, it is widely accepted that technology is the key driver of economic growth
of countries, regions and cities. Technological progress allows for the more efficient production of more
and better goods and services, which is what prosperity depends on.
2. What factors contribute to successful entrepreneurial activity in developing countries?
- Entrepreneurs seek out and seize possibilities. They turn unused and underutilized resources like land,
labor, and capital into national revenue and wealth in the form of commodities and services. They
contribute to the country's increase in Net National Product and Per Capita Income. Economic
development is defined as a process of upward movement in which a country's real per capita income
rises over time. Entrepreneurs are critical to the growth of any economy. In the process of
industrialization and economic expansion, entrepreneurs act as catalysts. Unless technical innovations
are put to economic use by entrepreneurs, technological advancement will not lead to economic
development.
Entrepreneurs start and maintain the economic development process in the following ways:
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Capital Formation:
Through the issuance of industrial securities, entrepreneurs mobilize the public's idle savings. Savings
from the public sector are invested in industry, resulting in more efficient use of national resources. The
rate of capital formation rises, which is necessary for rapid economic expansion. As a result, an
entrepreneur is a wealth producer.
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Improvement in Per Capita Income:
Entrepreneurs seek out and seize possibilities. They turn unused and underutilized resources like land,
labor, and capital into national revenue and wealth in the form of commodities and services. They
contribute to the country's increased net national product and per capita income, both of which are
essential indicators of economic progress.
•
Generation of Employment:
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Entrepreneurs create jobs in two ways: directly and indirectly. Self-employment as an entrepreneur is
the most direct path to an independent and noble life. Indirectly, they provide jobs to millions of people
by establishing large and small size company units. As a result, entrepreneurship aids in the reduction of
the country's unemployment problem.
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4. Balanced Regional Development:
Entrepreneurs in both the public and private sectors contribute to the reduction of regional economic
disparities. They establish industries in economically depressed areas in order to take advantage of
numerous concessions and subsidies granted by the federal and state governments.
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5. Improvement in Living Standards:
Entrepreneurs create companies that alleviate scarcity of critical commodities while also introducing
novel items. The mass production of items and the small-scale production of handicrafts, among other
things, assist to raise the living standards of the average person. These provide things at a lesser cost
and improve consumption diversity.
3.
Are humankind’s economic policies sustainable over the next few centuries?
- Maybe it depends, as long as humankind preserve and obey these policies as well as make the
economy grow more. The relationship between economic growth, human well-being, and the
achievement of a sustainable future has a long and complex intellectual history. These economics
policies that we need to obey include the interest rate and money supply, tax and government spending,
tariffs, exchange rates, labor market regulations, and many other aspects of government. These policies
are generally directed to achieve four major goals: stabilizing markets, promoting economic prosperity,
ensuring business development, and promoting employment. Sometimes other objectives, like military
spending or nationalization, are important.
4. What monetary and fiscal policies should a country use to achieve economic development with price
stability?
- Monetary policy has lived under many guises. But however it may appear, it generally boils down to
adjusting the supply of money in the economy to achieve some combination of inflation and output
stabilization.
Most economists would agree that in the long run, output, usually measured by gross domestic product
is fixed, so any changes in the money supply only cause prices to change. But in the short run, because
prices and wages usually do not adjust immediately, changes in the money supply can affect the actual
production of goods and services. This is why monetary policy generally conducted by central banks
such as the U.S. Federal Reserve (Fed) or the European Central Bank (ECB) is a meaningful policy tool for
achieving both inflation and growth objectives.
Such a countercyclical policy would lead to the desired expansion of output (and employment), but,
because it entails an increase in the money supply, would also result in an increase in prices. As an
economy gets closer to producing at full capacity, increasing demand will put pressure on input costs,
including wages. Workers then use their increased income to buy more goods and services, further
bidding up prices and wages and pushing generalized inflation upward an outcome policymaker usually
want to avoid.
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5.
How can LDCs export more and import less?
- A country that imports more goods and services than it exports in terms of value has a trade deficit or
a negative trade balance. Conversely, a country that exports more goods and services than it imports
has a trade surplus or a positive trade balance Because LDCs have less diversified economies, they
depend on a limited range of exports, often primary commodities. Further integration into the global
economy continues to be hampered by a range of supply-side constraints in these countries. Increasing
foreign earnings by exporting higher value-added goods has proven to be difficult for most countries
because lack of access to technology and the challenge of complying with quality standards of
developed countries, for instance, have typically kept them from moving up in the export value chain.
So, ITC supports the Least Developed Countries (LDCs) to enhance their participation in the world
economy and realize development goals through exports.