What is economic development?

We explain what economic development is and what are the different conceptions that seek it. Free market, and state intervention.

1. What is economic development?

Economic development can be defined as the ability to produce and obtain wealth , in addition it can be both at the level of personal development and also applied to countries or regions. Either in one or in another case, the development is linked to the livelihood and economic growth so as to ensure the welfare, prosperity is maintained and meets the personal or social needs of the people.

Economic development arises with the advent of the capitalist mode of production , which implies an increase in profit rates that allow the process of capital accumulation . These quantitative accumulation jumps are caused by several factors that can be combined as cost reduction, incorporation of more productive techniques or machines, on the exploitation of labor forces.

There are not only internal but also external factors, for example in the case of a nation’s economic development , the international context of high profit rates or external investments. The rational economic thought of public policies aims to sustain the level of growth, for this there are institutional regulations carried out in order to encourage and promote the efficiency of the productive system.

There are two main ways to understand the history of economic development , which led to the global scenario where we live today, the liberal conception and the protectionist conception.

2. Liberal Conception (Free Market)

There is on the one hand the liberal conception, according to which the industrial and capitalist development that began with the industrial revolution produced an advance in the production and reproduction of capital. This accumulation of capital was developed motivated by free trade and rational thinking in search of profit .

This economic process required individual free action to establish business production in a commercial and competitive manner, and also needed the training of the working class that was forced to sell its labor force in the market, free marketing , property private , the development of international trade and free enterprise.

We can understand the French revolution as the point at which individual freedom was established that allowed free action to produce ; and private property, without it, there would be no possibility to begin a process of capital accumulation and investment .

Commercial activity is thus based on competition between private parties and ownership. The current global scenario is the product of actors in the international market that are dedicated to industrial production and financial investment, based on rational positivist thinking that considers progress as an objective . The weakest point of this liberal conception is economic imbalance and inequality .

3. Protectionist Conception

The second vision of understanding economic development has a different conception of the role of the state, it is based on protectionism and economic intervention by the nation state through public policies that act for the purpose of avoiding the concentration of wealth and equitably distributing the product to guarantee decent levels of life , destitution, misery and with this same, equal possibilities.

This vision includes that the industrial revolution began a process of capital accumulation and distribution of the world, industrial central areas reached development through exploitation, expropriation and destining a secondary role based on the production of raw materials to other areas, such as Latin America and Africa.

This process of original accumulation begins with the mercantilists of the fifteenth century , who exterminated the indigenous indigenous population in order to appropriate land and marketable precious metals according to their concept of economic market.

The appropriation of the capitalist class is what drives the process of capital appropriation. Internationally there was what is known as the division of the world, between producers “industrial zones of progress”, and economically dependent areas “delayed”.