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INTRODUCTION TO BUSINESS ECONOMICS - Dr.KALEESHWARI.S
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- 2. Adam Smith Adam Smithis called the "father of economics" because of his theories on capitalism, free markets, and supply and demand.
- 3. • “Economics isthe science of wealth” This definition was given by Adam Smith. He is also known as the 'father of economics. According to this definition, economics is a science of the study of wealth only. It deals with production, distribution, and consumption.
- 4. • The word‘Economics’ originates from the Greek work ‘Oikonomikos’ which can be divided into two parts: (a) ‘Oikos’, which means ‘House’, and (b) ‘Nomos’, which means ‘Management’. • The meaning of the term, “study of an economy” includes: • (a) Alternative forms of an economy like capitalism, socialism and a mixed economy. (b) Economic decisions and their implementation by – Individual economic units like individuals, households and business units – Groups of economic units, institutions – Public Authorities • (c) Interrelationships between economic units and their groups. • (d)The performance of individual economic units, their groups, and the economy as a whole. • (e) Interrelationship between different economies.
- 5. The economic systemcomprises human being having variety of wants.These wants may be classified into basic two types: – EconomicWants – Non-EconomicWants Broadly speaking, wants which can be satisfied by the consumption of goods and services, are economic wants. In contrast, non- economic wants are those which do not relate to consumption of goods and services.
- 6. Basic Concept ofWants Wants: "Want"is defined as having a strong desire for something. The word "need" is defined as lack of the means of subsistence. In every arena of life, the two concepts are opposing elements. The basic needs of man include food, clothing and shelter. Human needs are many. They are both tangible and intangible. Tangibles include things that we can touch and fell like need for a vehicle or cell phone. Intangibles are only felt like satisfaction, happiness, jealousy etc. Wants are unlimited. As soon as one ant is satisfied another arises and this process goes on.
- 7. Scarcity: When we talkof scarcity within an economic context, it refers to limited resources. These resources are the inputs of production: land, labor and capital which are used for satisfying human wants. The basic economic problem that arises because of this limited resources is that people have unlimited wants but resources are limited.This creates scarcity.
- 8. Choice: • It canbe defined as a system of selecting or choosing one out of a number of alternatives. Choice arises as a result of scarcity of resources. Since it is extremely difficult to produce all that we need choice has to be made by accepting or taking up themost pressing wants for satisfaction based on the available resources.
- 9. Opportunity Cost: • Everyscarce good or activity has an opportunity cost. • Opportunity cost of anything is the cost of the next best alternative that is given up. • It refers to the cost of foregoing or giving up an opportunity. • It is the earnings that would be realized if the available resources were put to some other use. • It implies the income or benefit foregone because a certain course of action has been taken. • Thus, opportunity costs are measured by the sacrifices made in the decision. • If there is no sacrifice involved by a decision there will be no opportunity cost. • It is also called the alternative cost or transfer cost. • The opportunity cost of using a machine to produce one product is the income forgone, which would have been earned from the production of other products. • If the machine has only one use, it has no opportunity cost. • Similarly, the opportunity costs of funds invested in one's own business is the amount of interest earned if the amount had been used in other projects. • the opportunity costs of funds invested in one's own business is the amount of interest earned if the amount had been used in other projects.
- 11. Example; Workers deciding betweenworking extra hours or spending more leisure time face a clear opportunity cost. Opportunity Cost: Choosing to work more hours increases income but comes at the cost of reduced time with family, rest, or hobbies.
- 12. MEANING OF BUSINESSECONOMICS Business Economics consists of that part of economic theory which helps the business manager to take rational decisions. Economic theories help to analyze the practical problems faced by a business firm. Business Economics integrates economic theory with business practice. It is a special branch of economics that bridges the gap between abstract theory and business practice. It deals with the use of economic concepts and principles for decision-making in a business unit. It is also called Managerial Economics or Economics of the Firm. Managerial Economics is economics applied in business decision-making. Hence, it is also called Applied Economics
- 13. DEFINITION OF BUSINESSECONOMICS In simple words, business economics is the discipline which helps a business manager in decision making for achieving the desired results. In other words, it deals with the application of economic theory to business management.
- 14. FEATURES/CHARACTERISTICS OF BUSINESS ECONOMICS •1. Microeconomics: Business economics is micro economic in character. This is so because it studies the problems of an individual business unit. It does not study the problems of the entire economy. • 2. Normative science: Business economics is a normative science. It is concerned with what management should do under particular circumstances. It determines the goals of the enterprise. Then it develops the ways to achieve these goals. It always tries to match the future with the present.
- 15. • 3.Pragmatic: Businesseconomics is pragmatic (practical). It concentrates on making economic theory more application oriented. It tries to solve the managerial problems in their day-today functioning of the business by applying economic concepts and models. • 4. Prescriptive: Business economics is prescriptive rather than descriptive. It prescribes solutions to various business problems. Instead of focusing on what had happened, it focuses on what should happen in the future. This particular feature helps the business unit to rectify its own mistakes.
- 16. • 5. Usesmacroeconomics:Business economics is also useful to business economics. Macro-Economics provides an intelligent understanding of the environment in which the business operates. Business economics takes the help of macro-economics to understand the external conditions such as business cycle, national income, and economic policies of Government etc. • 6. Uses theory of firm: Theory of firm tries to solve business problems to maximize profits. Business economics largely uses the body of economic concepts and principles towards solving the business problems. Business economics is a special branch of economics to bridge the gap between economic theory and managerial practice.
- 17. • 7. Managementoriented • The main aim of Business economics is to help the management in taking correct decisions and preparing plans and policies for future. Business economics analyses the problems and give solutions just as doctor tries to give relief to the patient. • 8. Multi disciplinary: Business economics makes use of most modern tools of Mathematics, Statistics and Operations Research in planning, decision etc. • 9. Art and science. Business economics is both a science and an art. As a science, it establishes relationship between cause and effect by collecting, classifying and analyzing the facts on the basis of certain principles. It points out to the objectives and also shows the way to attain the said objectives. On the other hand business economists attain perfection by continuously applying and learning the concepts of business economics. It mostly deals with experience.ent oriented:
- 20. SCOPE (NATURE) OFBUSINESS ECONOMICS • 1. Demand analysis and forecasting: • The foremost aspect regarding scope is demand analysis and forecasting. A business firm is an economic unit which transforms productive resources into saleable goods. Since all output is meant to be sold, accurate estimates of demand help a firm in minimizing its costs of production and storage. A firm must decide its total output before preparing its production schedule and deciding on the resources(land, labour, capital and technology) to be employed. Demand forecasts serves as a guide to the management for maintaining its market share in competition with its rivals, thereby securing its profit.
- 21. •Cost and productionanalysis: • A firm's profitability depends much on its costs of production. A wise manager would prepare cost estimates for a range of output and identify the factors that cause deviations in cost (increase or decrease). Once the factors are known, it can be possible to determine the optimum level of output where the cost of production would be minimum. Production processes are under the charge of engineers but the business manager works to carry out the production function analysis in order to avoid wastage of materials and time. Sound pricing policies(determining selling price) depend much on cost control. The main topics discussed under cost and production analysis are: Cost concepts, cost-output relationships, Economies and Diseconomies of scale and cost control.
- 22. • Pricing decisions,policies and practices: •Another task before a business economist is the pricing of a product. Since a firm's income and profit depend mainly on the price of the product, the pricing policies and all such decisions are to be taken after careful analysis of the nature of the market in which the firm operates. The important topics covered in this field of study are: Market Structure Analysis, Pricing Practices and Price Forecasting.
- 23. • Profit analysis: •Each and every business tends to earn profit. It is the profit that increases the competitive strength of a firm in the long run. Economists tells us that profits are the reward for taking risk in uncertain situations. A successful business economist is one who can form more or less correct estimates of costs and revenues at different levels of output. The more successful an economist is in reducing uncertainty, the higher are the profits earned by the business. Therefore,profit-planning and profit measurement constitute the most challenging area of business economics.
- 24. •Capital management: •Another challengingproblem for a modern business economist is planning the capital investment. Investments are made in the plant and machinery and buildings which are very high. Therefore, capital management requires toplevel decisions. It deals with Cost of capital, Rate of Return and Selection of projects etc.
- 25. •Effective utilization ofbusiness resources: •It also studies how well resources can be put to best possible use. Various tools and techniques are used to determine least cost- maximum profit combinations. Methods such as linear programming, networking analysis are used in determining the optimal levels of performance.
- 26. • Effective useof economic policies for business development: •Business economics is micro in character but it is always influenced by macro factors. For example, an individual firm’s idea (micro economic) of manufacturing plastic bags may be affected by the ban on plastic by the government (macroeconomic). Thus economic policies (macro) have to be carefully studied in order to make proper business decisions.
- 27. BUSINESS ECONOMIST • Abusiness economist specializes in basic economic theory. With this knowledge, he supports the firm in making several economic decisions that are crucial to its growth. • A business economist is responsible for analyzing consumer behaviors along with economic and market trends to make predictions about the economy. They use this information to develop strategies and forecasts and help businesses make important decisions about pricing, market dynamics, and competition.
- 28. ROLES AND RESPONSIBILITIESOF BUSINESS ECONOMISTS • 1. CAPITAL BUDGET A business economist is responsible for preparing the capital budget. Proper allocation of both investment capital and working capital is to be done to elicit optimum satisfaction. • 2. SALES FORECASTING Forecasting the sales for the future years is also another function of a business economist. They have to maintain a statistical record of the sales performance of their organization. • 3. INDUSTRIAL MARKET RESEARCH A business economist should conduct proper market research or surveys to understand the market demand for their product, the nature of competition, etc. • 4. PRICING OF INDUSTRIAL PRODUCTS The prime function of the business economist is to decide on the pricing of a firm’s product. Pricing should be done in such a way that it attracts customers, as well as it should gain profit for the firm.
- 29. • 5. FUTUREINVESTMENT PROGRAMS - A business economist should advise the firm regarding future investment prospects. Continuous assessment of the economic scenario is essential to decide on the future investment prospects. • 6. ECONOMIC ANALYSIS OF COMPETITORS - One of the fundamental functions of a business economist is to perform economic analysis of the competitors. They have to maintain statistical records of rival firms also. • 7. ADVICE ON TRADE AND PUBLIC RELATIONS- Decisions regarding expansion of the business activities and trade relations are also one of the functions of a business economist. The business economist should supply economic information to the organization and its public. • 8. ADVICE ON PURCHASE OF RAW MATERIALS - A Business economist advises the business firm regarding the purchase of raw materials required for the production process.
- 30. • 9. ADVICEON INVENTORY BUILDING Another important function of business economists is to advise on inventories and inventory creation. • 10. ENVIRONMENTAL ASPECTS AND TECHNOLOGICAL DEVELOPMENTS A Business economist has to monitor the fast-changing technological developments. An economic decision is taken within the framework of technological development. Therefore, the business economist has to make a continuous assessment of the impact of technological changes as well as other external factors. • 11. MARKET SURVEY TO DETERMINE THE NATURE AND EXTENT OF COMPETITION Market surveys should be carried out systematically to understand the nature of competition in the market.
- 31. RESPONSIBILITIES OF BUSINESSECONOMISTS • 1) BETTER MANAGEMENT OF RESOURCES The prime responsibility of a business economist is to manage the resources in a business enterprise effectively. Utilisation of optimum production capacity, exploitation of hidden talents in the manpower, and better financial management are success factors in a business. It is assumed that the opinion of a business economist is more important, hence it is drawn through analysing facts and figures. • 2) ECONOMIC FORECAST. Though the business economist works in an uncertain environment, he is required to forecast the demand for the product, sales of the product, net profit, etc, as realistically as possible. This analysis should indicate the probable risk that the company may experience in varying future situations. The business economist should suggest how the management can adjust the production and marketing of the product and withstand the economic fluctuations. Business economists must maintain established contacts with the data sources for forecasting and analysis.
- 32. Contributions of Economistsin Poverty Alleviation • 1. Development of Poverty MeasurementTools Economists like Amartya Sen revolutionized how poverty is understood by introducing multidimensional measures beyond income. His "Capability Approach" emphasized that poverty should be seen as the deprivation of basic capabilities, such as health, education, and participation in society—not just low income. This redefinition influenced global indices like the Human Development Index (HDI) and Multidimensional Poverty Index (MPI), enabling policymakers to better target interventions and assess the real impact of poverty reduction programs. • 2. Designing Pro-Poor Economic Policies Economists have been instrumental in formulating macroeconomic policies that foster inclusive growth. By analyzing the impact of fiscal policies, taxation, and government spending on low-income groups, they help create strategies that prioritize education, healthcare, and employment opportunities for the poor. For example, policies based on progressive taxation and targeted subsidies can redistribute wealth and improve access to essential services, thus directly alleviating poverty.
- 33. • 3. ImpactEvaluation of Poverty Alleviation Programs Through tools like randomized controlled trials (RCTs) and cost-benefit analysis, economists assess the effectiveness of poverty alleviation programs. Notable work by economists like Abhijit Banerjee and Esther Duflo has provided data-driven insights into what actually works in areas like microfinance, education incentives, and health interventions. Their evidence-based approach has improved the allocation of resources and ensured that successful programs are scaled up while ineffective ones are modified or discontinued. • 4. Promotion of Microfinance and Financial Inclusion • Economists have shown how access to financial services can empower the poor by enabling them to save, invest, and manage risks. Muhammad Yunus, through the Grameen Bank, demonstrated how microcredit could help the poor start small businesses and generate sustainable incomes. This model has been widely replicated and has influenced economic thinking about empowering marginalized communities through financial tools.
- 34. • 5. GuidingInternational Aid and Development Programs Economists working with organizations like the World Bank, IMF, and UN help shape the direction and structure of international aid. Their research helps determine how aid can be most effective, emphasizing areas such as infrastructure development, education, and governance reform. By aligning aid with evidence-based economic principles, they ensure that resources are directed to initiatives with the greatest potential to lift populations out of poverty.
- 35. MACRO ECONOMICS • Macroeconomicsis the branch of economics that studies the behavior and performance of an economy as a whole. It focuses on the aggregate changes in the economy such as unemployment, growth rate, gross domestic product and inflation. • •It is that part of economic theory which studies the economy in its totality or as a whole. •It studies not individual economic units like a household, a firm or an industry but the whole economic system. Macroeconomics is the study of aggregates and averages of the entire economy. • •Such aggregates are national income, total employment, aggregate savings and investment, aggregate demand, aggregate supply general price level, etc.
- 36. Importance of Macroeconomics •It helps to understand the functioning of a complicated modern economic system. It describes how the economy as a whole functions and how the level of national income and employment is determined on the basis of aggregate demand and aggregate supply. • It helps to achieve the goal of economic growth, higher level of GDP and higher level of employment. It analyses the forces which determine economic growth of a country and explains how to reach the highest state of economic growth and sustain it. • It helps to bring stability in price level and analyses fluctuations in business activities. It suggests policy measures to control Inflation and deflation. • It explains factors which determine balance of payment. At the same time, it identifies causes of deficit in balance of payment and suggests remedial measures. • It helps to solve economic problems like poverty, unemployment, business cycles, etc., whose solution is possible at macro level only, i.e., at the level of whole economy. • With detailed knowledge of functioning of an economy at macro level, it has been possible to formulate correct economic policies and also coordinate international economic policies.
- 37. INFLATION • Inflation isthe increase in the price of goods and services. • This increase has two main characteristics: • It is sustained, which means that it is not seasonal, the tendency will be for it to remain over time. • It is widespread, affecting most of the sectors that make up the economy.
- 38. The increase inprices may have different causes • Demand-pull inflation: Occurs when the demand for goods and services rises and producers cannot meet this increase • Built-in inflation: occurs when people anticipate an increase in future prices and immediately build it into their expectations to try and reduce the future effect of this price increase • Cost-push inflation: occurs when the price of raw materials becomes more expensive, in this case, the producer will need to increase prices to maintain their profit level, which will lead to an increase in prices • Monetary inflation: occurs when central banks increase the level of money supply above the increase in the supply of goods
- 39. The main consequenceswould be: • Loss of purchasing power: with goods and services more expensive, the consumer can buy fewer of them since more and more money is needed to buy the same number of products • A brake on business productivity • Uncertainty about the future • Inefficient allocation of resources
- 40. DEFLATION • Also callednegative inflation. During a deflationary period, prices fall in the same way as they arise in the case of inflation: continuously and in a generalised manner. •This fall in the prices of goods and services may have different causes • •Insufficient demand: normally occurs in economic recessions or depressions, in which consumers have less spending capacity, so they demand far fewer goods or services • •Excess supply: in this case producers are forced to reduce prices, in order to sell their output and not suffer an increase in inventories • The consequences of deflation are: • •The danger of a vicious circle: fall in demand – decrease in prices- fall in profits – cost reductions – job cuts – fall in demand • •Reduction in economic activity • •Increase in unemployment • •Uncertainty
- 41. • Measures ofNational IncomeMeaning and Definitions • National Income is generally defined as income of the nation. The National income reveals the nature of economic activity in a country. National Income data provides an idea of a country’s aggregate economic activity. • Pigou has defined National Income as “that part of the objective income of the community including income derived from abroad which can be measured in money.” • National income is expressed with reference to a period of time, namely a year. • Gross National Product ( GNP) • GNP is defined as the total market value Of final goods and services produced in a year. • The gross national product is the basic social accounting measure. It includes all economic productions in the economy during a year.
- 42. • Gross DomesticProduct ( GNP ) • Gross domestic product is the aggregate values of output of goods and services produced in a country, without adding net factor incomes received from abroad. • GDP is measured at market price. • GDP = GNP – Income received from abroad. •
- 43. • Measurement ofNational Income • There are three methods off measuring national income or an economy's output or national product.They are:- • 1. The Product Method • 2. The Income Method • 3. The Expenditure Method • 1.The Product Method • Under Product method, production of all types of goods is estimated and they are valued at market prices.The net production of all the industries in the country are added up ( Like agriculture, industry, trade and Commerce, etc. ).There are two approaches to calculate NI under product method.They are:- • 1. Value Added Approach • 2. Final Goods Approach
- 44. • According tovalue added approach, a summation of the increase in value at each separate production stage, which results in output in final form, gives the value of GNP (NI). • According to the final goods approach, only the final value of goods and services are added ignoring all intermediate transactions. Since the value of intermediate goods ( raw materials, fuel etc.) are included in the value of final product, its value should not be considered, so that double counting can be avoided. If the value of intermediate goods are also added, then it would inflate the figure of National income. To avoid this, the value of only the final product has been considered.
- 45. • 2.The ExpenditureMethod • Expenditure approach method involves in calculating the value of the final goods consumed. Most of the goods produced in a country are consumed. But there are some goods which remain unsold. If unsold stocks are regarded as having been bought by the producers who hold them as inventories, then the monetary value of the total national production would be equal to the national expenditure. • 3.The Income Method • The expenditure made by the people of a country on good and services produced in a country during a year becomes the income of the various factors, which are collaborated in the production of these goods and services.The factor income is grouped into the following categories: • · Wages and salaries • · Income of company business • · Rental incomes of persons • · Corporate profits • · Income from net interest
- 46. BUSINESS CYCLE MEANING •The term‘business cycles’ or ‘trade cycles’ referred to fluctuations in production, employment and income of the people of a country. •A business cycle is a very complex economic phenomenon and it is associated with alternating periods of prosperity and depression. DEFINITIONS OF BUSINESS CYCLE •According to Haberler, “The business cycle in general sense may be defined as alternation of periods of prosperity and depression of good and bad trade.”
- 47. Characteristics of abusiness cycle • Business cycles occur periodically at fairly irregular intervals. • Each business cycle is characterized by the presence of crisis. • A business cycle is a wave like movement. • The process of the business cycle is cumulative and self- reinforcing. • The cycles are similar but not identical.
- 48. PHASES OF ABUSINESS CYCLE A typical business cycle is characterised by five different phases or stages.They are depression, recovery (revival), prosperity (or full employment), boom (overfill employment) and recession.
- 49. Depression • This periodis also called as contraction. Depression is a stage of a business cycle in which the business is at the lowest ebb. The entire economy is engulfed in depression. • Depression is characterised by a sharp fall in production, increase in mass unemployment, falling prices, falling profits, low wages, contraction of credit by the banks and other financial institutions and a high rate of business failures.There will be all around pessimism and despair.
- 50. Characteristics of depression •In this period, Bank credit is Stopped and consequently money supply also is reduced. • · The purchasing power of the money goes on rising but purchasing power of the people remains very low, which is due to unemployment. • · Since the general purchasing power of the people is lost owing to unemployment, their demand for goods and services also falls.This affects the production also. • · All construction activities come to an end. • · The consumer goods industries such as food and clothing continue to produce at a lower level. • · Many firms will be closed down on account of accumulated losses. • · The agriculturalists are hit hard more than the manufacturers.
- 51. Recovery or revival •It refers to the lower turning point at which the economy undergoes changes from depression to prosperity. • The conditions of depression were no doubt very severe. But, this stage of affairs will continue for three to four years. During the credit of depression, prices and costs fall to a very low level with huge unemployment of Labour and productive powers. Business activity settles down at a new equilibrium level of low prices, log costs and low profits.
- 52. Characteristics of revival •During this period, rays of hope appear in the minds of the business people and they feel that the economic situation was as not as bad as it was in the crisis period. • Pessimism which was seen in every walk of life during the initial period of depression will vanish. • The business people will now find that the situation better, to start production. • The industrial production picks up very slowly and gradually. As a result of this, demand for raw materials, capital and Labour also increases. • Wages are low even for efficient workers; sufficient number of skilled workers is now available. • Money is cheap and also the raw materials. All this result in the demand for capital goods. • The producers order for new machinery or repair the old machinery. • Constructional and allied industries receive orders and they start re-employing the workers. • When the workers get employment, they get salaries and wages.
- 53. Prosperity or fullemployment • Revival once started, gathers momentum. The initial revival which was started in a humble way, picks up the speed and is now strengthened by numerous developments. The period of prosperity also is called period of expansion or upswing in the business cycle. The period of expansion may last for five to six years. The expansion goes on without interruption and all those unemployed men and materials are absorbed in economic activities.
- 54. Characteristics of prosperity •The investment activity picks up, followed by expansion of credit by commercial banks. • · Stock markets also start functioning vigorously. • · Prices and profits also rise influencing further investment • · Optimism grows and spreads far and wide. • · The country is gradually experiencing the stage of full employment. • · During this period, the economic activities become hectic. • Thus prosperity phase refers to a state where the economy attains maximum growth with full employment and the movement of the economy is beyond full employment.
- 55. Boom or Overfullemployment • Boom is the final stage of a business cycle where the business activity expands very rapidly. Economy rises to new heights. • The prosperity phase of a business cycle is one where the economy attains maximum growth with full employment. If the economy is stabilised at the point of full employment, there will be a full employment equilibrium. At this point, all the resources are optimum employed. The business reaches maximum growth when there is optimism prevailing in all sectors of the economy and businessmen with the hope of earning more take up speculative activity. They continue to invest on various sectors of the economy.
- 56. Characteristics of boomor overfull employment • Money wages rise, profits increase and the interest rates also go up. • The demand for bank credit also increases. • Attracted by high profits, industrialist increase investment activity. • The banks also meet the capital requirements at higher rates of interest. • The resource owners also increase price of resources. • Everywhere there is jubilation.
- 57. • Recession • Itis a turning point from boom condition where prosperity ends and recession begins. • Characteristics of recession • There is a fall in the level of Income and output. • Unemployment starts increasing. • There is a fall in income, expenditure, prices and profit . • Decline in bank credit. • Pessimism starts prevailing among investors . • Therefore recession refers to a situation where there is a decline in overall business activity.
- 58. Measures to improvea country’s GDP To improve a country's GDP, governments can boost economic growth through investments in infrastructure, education, and technology, and by fostering a stable macroeconomic environment. Other measures include adopting industry-friendly policies, streamlining trade, reducing inefficient regulations, and promoting innovation. A focus on human capital formation through education and skills development is also a crucial long-term strategy.
- 59. Government & FiscalPolicy • Invest in Infrastructure: • Building roads, transportation, and utilities increases productivity and stimulates economic activity. • ReduceTaxes & Increase Spending: • Lower taxes or increased government spending can put more money into the hands of consumers and businesses, encouraging investment and consumption. • Promote Stable Monetary Policy: • Prudent fiscal and monetary policies, such as adjusting interest rates, can create a stable environment for economic growth.
- 60. Structural &Trade Reforms •RemoveTrade Barriers: • Reducing tariffs and quotas encourages foreign investment and participation in international trade, increasing competition and efficiency. • Deregulation: • Removing unnecessary rules and regulations can reduce inefficiencies, although careful consideration is needed to prevent negative side effects. • Encourage Innovation &Technology: • Investing in and adopting new technologies can boost productivity and competitiveness in high-potential sectors.
- 61. Human Capital Development •Invest in Education & Skills: • Strengthening education and literacy leads to increased human capital, which is crucial for economic growth. • Support Entrepreneurship: • Policies that encourage and support entrepreneurs can foster new businesses and economic opportunities
- 62. StructuralTransformation & Investment •Allocate Resources Efficiently: • Shifting labor, capital, and land from less productive sectors (like agriculture) to more productive ones (like manufacturing and services) can significantly raise productivity. • Promote Urbanization: • Encouraging migration from rural areas to cities can create new job opportunities and drive growth in urban centers.
- 63. Individual & BusinessContributions • Support Fair Labor Practices: • Paying fair wages and supporting businesses committed to fair labor standards can increase household savings and consumption. • Encourage Responsible Consumption: • Insisting on paying for goods and services with bills helps increase the amount of economic activity that is recorded in GDP.