Impact of Economic Development on Science

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ENGINEERING ECONOMICS
ASSIGNMENT 1

ECONOMIC DEVELOPMENT AND ITS IMPACT ON SCIENCE

Ananthtejas R
09CO12

Economic development
Economic development is a broad term that generally refers to the sustained, concerted effort of policymakers and community to promote the standard of living and economic health in a specific area. Such effort can involve multiple areas including development of human capital, critical infrastructure, regional competitiveness, environmental sustainability, social inclusion, health, safety, literacy, and other initiatives. Economic development differs from economic growth. Whereas economic development is a policy intervention endeavor with aims of economic and social well-being of people, economic growth is a phenomenon of market productivity and rise in GDP. Economic development has several definitions from local to global perspectives. Professor of Economics and Public Policy Alan Deardorff at the University of Michigan as part of his International Economics Glossary calls it: "Sustained increase in the economic standard of living of a country's population, normally accomplished by increasing its stocks of physical and human capital and improving its technology."

How are economic development and science related ?
Both science is very dependent on the economy for its funding, pre-required technology and other resources and the economic development is also heavily dependant on science as only advances in technology and research result in export and better facilities. There is evidence that the differences in total productivity among countries - differences that originate in different levels of technology - explain more than 60 percent of the differences among these countries in per-worker income and growth rates. Although growth has its ups and downs in the course of the economic cycle, the average growth rate of the global economy has been accelerating over time. By inference, the rate of increase in technological level in global economies has also been accelerating over time. Society earns a much higher return on an investment in research and development than the investor earns. To understand better about the impact of economy on science let us consider this survey conducted by “The Science Advisory Board”. The question asked was “Has your research been affected by the current economic recession?” The majority of all respondents across all segments indicated "yes”.

Economists emphasize the importance of the openness of an economy for its growth rate. There is no economy in the world, in the modern era, that has managed to grow rapidly over a lengthy period without increasing its exports and its imports steeply. For this there must be a strong base general purpose technologies. These are general- purpose technologies - such as mechanization, electrification, and computerization - from which other technologies derive many uses. The contribution of these technologies to productivity is large and long-lasting. However, it can take many years for an economy to assimilate multipurpose technologies. Furthermore, at the beginning of the process the rate of productivity growth in a given economy may even decline as the new technology crowds out antiquated technologies. But once a certain stage is reached, the boost in economy is very high and helps the country develop a lot. And on the technology side, countries have become interdependent due to the crossing of knowledge among them. Evidence from around the world speaks clearly about the importance for Israel of enhancing human capital in education and technological infrastructure, so that we stay at the forefronts of knowledge and technological innovation. These will lead to increases in productivity and per-capita growth. To bring this about, it is important to establish a correct set of incentives and a correct institutional structure. It is important to develop a set of incentives that will promote education, with emphasis on...
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