Category: Economic Growth

Conceptual/Theoretical Model

In most countries, particularly in developing nations, tourism is one of the significant sources of revenue and the main contributor to economic growth. Tourism also plays a vital role in promoting economic growth by contributing to the gross domestic product (GDP) (Shih and Do 2016, 371-372). East Timor (also known as Timor-Leste) is one of the worlds youngest countries after having got its independence in 2002 from Indonesia. The countrys tourism sector is still at the infancy stage, owing to continuous conflict and clashes between various security agencies and the government. However, despite its dormancy, the tourism sector in Timor-Leste, just like in any other Southeast Asian countries has an immense potential to contribute to the countrys economic growth and significantly boost its GDP growth for sustainable development.

Research Data

Data Description

The panel data on tourism growth in Southeast Asia used in this study comes from the World Bank. The GDP growth data covers 11 countries on the Asian continent¹ including annual net tourism income as well as an annual number of travelers entering the respective countries from the year 2000 to 2018. The data set also included two variables coded Receipt and GDP. The Receipt variable represented international tourism receipts in US Dollars that included expenditure of international inbound visitors on items on the reporting countries, including expenses on national carriers and international transport. The GDP variable represents the annual GDP of countries in US dollars. In order to make inferences specifically for Timor-Leste, a dummy variable called TimorLeste was created, which coded data as 1 if the country was Timor-Leste and 0 if otherwise. Another variable called ReceiptsMn_TimorLeste was created to estimate if the impact of tourism was different from all the other countries in Southeast Asia. It was created by multiplying ReceiptsMn with the dummy variable TimorLeste.

Table 1: Variable description table

Summary Statistics

The mean international receipts in Southeast Asian countries was $7.5 billion, with a standard deviation of $10.5 billion. Similarly, the mean GDP in South Asian countries was $167.14 billion, with a standard deviation of $212,041 billion. The significant standard deviations indicate that the data entries are widely spread around the means.

Table 2: Descriptive statistics for Southeast Asia

In Timor-Leste, the mean international receipts were $35.64 million, with a standard deviation of $22.01 million. The mean GDP was $3.83 billion, with a standard deviation of $1.4 billion. This implies that the mean GDP and international receipts of Timor-Leste were lower than the average GDP of Southeast Asian countries during the observed years.

Table 3: Descriptive statistics for Timor-Leste

Correlation Analysis

Pearsons correlation coefficient between the two variables was 0.5605, which implied that there was a significant correlation between the variables. This can be explained by the fact that South-Eastern countries, in general, are highly dependable on the income obtained from international tourists. The results of correlation analysis suggested that a regression model can provide significant insights for predicting GDP using international tourism receipts.

Table 4: Pearsons correlation between variables

Regression Model

The regression result presented in Table 3 below shows that the regression model had R² (R-squared) of 0.3141, which indicated that 31.41 percent of the variability in the dependent variable (annual GDP) could be explained by the independent variable (international receipts). The regression model was not statistically significant,

This result showed that the model could statistically significantly predict the dependent variable. According to the regression result, the regression model will be as shown in an equation below:

The regression model above shows that there is a positive association between international tourism receipts and GDP, which supports the findings of Nguyen, who established that the GDP growth in developing countries is directly proportional to the amount of receipts received from international tourists. (Nguyen 2015, 4).

Table 5: Linear regression model without dummy variable (in million dollars)

The regression model presented above does not include a dummy variable, which is designed to predict the impact of international receipts on the GDP of Timor-Leste. The results for the second regression analysis with a dummy variable are presented in Table 6 below.

Table 6: Linear regression model with the dummy variable (in million dollars)

Considering the results of the analysis, the regression model that could predict national GDP using the information about the international receipts is as follows:

The model demonstrates that there is a positive correlation between international tourism receipts and GDP, and an increase in $1 million of receipts leads to a $10.96 million increase in annual GDP of countries. The constant, however, is different for Timor-Leste and the rest of the Southeastern countries.

In order to understand if the effect of tourism receipts was different in Timor-Leste in comparison with other countries in Southeast Asia. The model that could estimate the difference was as follows:

The results of the regression analysis are presented in Table 7 below:

Table 7: Linear regression model with the dummy variable and Reciepts_TimorLeste (in million dollars)

The results of the regression analysis revealed that the tourism receipts do not produce a significantly different effect on GDP in Timor-Leste in comparison with other countries in Southeast Asia (p=0.984).

Limitations of the data discovered

Although the data file was obtained from the World Bank database, which is a reputable institution, it had two significant limitations. First, there were missing observations in variables for some countries. For instance, Vietnam lacks information about GDP in three years. Secondly, the data presented on the World Bank website is the official information, and the actual data may differ.

Bibliography

1. Nguyen, Anh Tru. (2015) Examining the Relationship between Tourism and Economic Growth in Southeast Asia: A Vector Autoregressive Model Approach. International Tourism and Hospitality Journal 1, no. 2: 1-17.
2. Shih, Wurong, and Ninh TH Do. (2016) Impact of Tourism on Long-Run Economic Growth of Vietnam. Modern Economy 7, no.3: 371-376.

Footnotes

1. Timor-Leste, Vietnam, Thailand, Singapore, Philippines, Myanmar, Malaysia, Lao PDR, Indonesia, Cambodia, and Brunei Darussalam.

As a target article to analyze, the study The Role of Natural and Human Resources on Economic Growth and Regional Development: With Discussion of Open Innovation Dynamics by Saleh et al. (2020) is chosen. The articles main topic concerns the assessment of the role of various resources, including natural and human ones, in achieving economic growth in the chosen Indonesian region, namely Bulukumba Regency. Natural resources have always been at the core of the nations success. According to Saleh et al. (2020), in the modern world, the information and knowledge people acquire are the primary determinants of the successful implementation of opportunities for building sustainable economic systems. This makes this article important, and the study offers an innovative theory that reconciles the value of natural and human resources, explaining the success of some modern nations.

Regional growth is significantly related to maximizing human and natural resource use. Suppose existing human resources become more proficient in managing the agricultural sector by shifting their perspective to focus solely on economically satisfying the production needs of society (Saleh et al., 2020). It should be noted that opposing arguments critique the significance of human resources as the primary factor. To prevent constant labor migration, the government should find a way to keep creative people in the country. This can be done if the country already has its own capital, which is accumulated by natural resources.

The article has been chosen because it reveals the economic aspects of the use of different types of resources and provides unique findings on how growth drivers can be combined. Saleh et al. (2020) demonstrate the detailed relationship between different variables, and it can be concluded that investment principles should be based not only on financial nuances but also on those related to the environment. Therefore, the reviewed article is valuable from the perspective of analyzing alternative ways of developing the economy.

Reference

Saleh, H., Surya, B., Annisa Ahmad, D. N., & Manda, D. (2020). The role of natural and human resources on economic growth and regional development: With discussion of open innovation dynamics. Journal of Open Innovation: Technology, Market, and Complexity, 6(4), 103. Web.

The minimum wage is an economic policy in which the state controls the minimum income of the citizens. It is distributed all over the world and is embedded in any economic model as an essential element. This model has both economic benefits and disadvantages that affect the outcome of any change in the minimum wage for the population. Consequently, the importance of this component of the economy affects the IPE (International Political Economy).

The importance of the minimum wage for the population lies in the economic impact it has. Economically the minimum wage is seen as a negative model that hinders the proper development of a working business. This is due to the fact that the change in the minimum wage does not entail a real economic upsurge of the population, but rather the opposite: with an increase in the minimum wage required from companies, in order to avoid unnecessary costs, companies will reduce the staff of employees. Furthermore, any ill-advised changes in the minimum wage are detrimental to economic growth, also any action in this area can result in significant consequences for the whole economy itself.

Considering the minimum wage from the perspective of the global economy, the importance of the economic impact of the minimum salary-level on global stability is revealed. The minimum wage is one of the factors of the provision of the population and is reflected in the image of the country on a global scale. That is why the international importance of the correct and deliberate management of the minimum wage in the country is highlighted, because only by comparing all the risks and benefits of changing it, countries achieve economic growth.

External factors such as Consumer Price Index (CPI), consumer behavior, and inflation rate play a very important role in stimulating economic growth. For instance, the rate of inflation of a given economy will affect its growth since a high inflation rate may lead to low economic growth. Though internal factors may be performing well to stimulate economic growth, the trend of external factors may favor or not favor economic growth. This study will look at each of these factors to establish whether they affected the economic growth of Australia.

Inflation

Inflation generally refers to the rise in price levels of goods and services in a given economy for a given period. Inflation affects the economy both positively and negatively. The positive effects of inflation include adjustments of the nominal interest rates by the central bank particularly in a time of recession. As Lim (2009) notes, rising inflation also encourages investments in projects that are non-monetary (p.110).

On the other hand, the negative effects of inflation include lowering the value of money, discouraging saving investments, and a shortage of goods in the economy. According to Burdick and Fisher, inflation erodes the purchasing power of the consumers (2007, p.73). The rate of inflation in Australia was about 1.8% in 2009, which had several impacts on the countrys economic growth. The rate of inflation affects the decision of individuals, lenders, borrowers, and businesses.

This rate of inflation is below the target of the government of 2% to 3%, which ensures that there is economic growth in the country (Australian Bureau of Statistics 2011). This rate of inflation, therefore, favored household stimulus since the prices of goods were kept as low as possible (Nation Building 2011). The purchasing power of individuals and businesses was enhanced by this low rate of inflation.

Consumer price index (CPI)

CPI and inflation rate are very closely related. CPI measures changes in the prices of goods and services over a given period in a given economy. At the beginning of this year, CPI in the Australian economy was 3.3 %, which was an increase from 2.7 % in the closure of 2010. The CPI of Australia is the Laspeyres index with some level of bias (Barrett & Brzozowski 2010, p.1) and this shows that there was an increase in prices, which affected the consumer basket that could be afforded with the consumer budget. Consumers can now afford fewer goods and services compared to what they could afford at the end of last year. However, this change has little effect on the household budget and spending. Thus, the household stimulus was affected by the increasing price changes even if the effects were not of high magnitude thus lowering economic growth.

Analysis

The figures below show more analysis of the CPI in Australia for the year 2010/ 2011 from the Reserve Bank of Australia (Measures of Consumer Price Inflation 2011).

The figures above show how the CPI of Australia has been fairing for the past three quarters this year. The figures also show this index in terms of the weighted and trimmed mean. From these figures, the last quarter of the year has recorded decreasing CPI. In September 2010, the CPI was 2.2 and decreased to 1.8 in the next three months. However, this figure has remained constant in the last three months. This trend is also reflected in the weighted mean but the trimmed mean shows slight variations.

Reference List

Australian Bureau of Statistics, 2011. Consumer Price Index. Web.

Barrett, G. F., & Brzozowski, M., 2010. Using Engel Curves to Estimate the Bias in the Australian CPI. Economic Record, 86 (272), pp. 1-14.

Burdick, C., & Fisher, L., 2007. Social Security Cost-of-Living Adjustments and the Consumer Price Index. Social Security Bulletin, 67 (3), pp. 73-88.

Lim, G. C., 2009. Inflation Targeting. Australian Economic Review, 42(1), p110-118.

Measures of Consumer Price Inflation, 2011. Reserve Bank of Australia. Web.

Nation Building, 2011. Economic Stimulus Plan. Web.

What we know about the global financial crisis is that we dont know very much Paul L. Samuelson.

The historical examples of economic growth and downturns and economic theories propose different ways out and solutions to overcome the financial crisis and stabilize the economic situation in a country. I am not a professional economist or accountant but recent changes and transformations in our country affect all people in spite of their social class, gender race, or profession. I became interested in this topic two years ago when the first signs of the crisis became evident to the general public. Since that time, I have investigated the matter of economic growth and try to find (or identify) the best solutions to stabilize our economy.

From my two-year research, I can say that there is no ideal or single answer to the problem of economic crisis and fast economic growth. Procedures for improving internal economic controls have been developed by many countries, but only some of them were efficient and successful. The most popular approaches applied by France and Germany included an increase in middle-management personnel and greater use of professional economic consultants; interdivisional billing at the going market price (which sharpens competition on the national level); improved accounting and cost-control procedures; and devices to speed the flow of data essential to financial decision making. There is a common understanding of the serious nature of the crisis, even if no agreement on ultimate causes and consequence, among a range of people with quite different politics (Botz 2009). By these and other means modern federal administrations seek to rationalize operations, reduce financial costs, increase output and sales, and grow at the expense of rivals.

I can say that modern economies do not grow from the bottom up to the top down in a short period of time. In spite of such vivid examples as the Japanese economic miracle and Chinese growth, it took decades for these countries to achieve economic growth and prosperity. I rejected the idea of government interventions in the American economy proposed by Obama and reduced spending on societal security and other social programs. I can say that free from all but the most essential entrepreneurial responsibilities, the financial executives are far better able to concentrate on long-term financial strategies for growth and expansion, better able to determine whether a new service created by the research department uses enough of the companys present resources, or will help sufficiently in the development of new ones to warrant its production and sale. In spite of government financial support proposed to some corporations only, it would be better to allow them to perform independently and accept all risks by themselves. Also, business corporations can better decide whether or not to go into new product lines, to set up new divisions for their production and sale, or to integrate these activities into an already extant division that is closely related to the new lines. In general, their essential functions are to synchronize, appraise, and determine general policy (Fishback and North, p. 32). American history tells us that government interventions could not improve the economic position of the country as they are directed towards some industries only depriving other industries a chance to compete on the national scale. Coordination by the central office of product flow through the several departments proved even more formidable. Fundamentally, the issue was to analyze intelligently a host of economic functions  including engineering and research as well as production, distribution, transportation, procurement of supplies, and investment -when the appraisals had to be made in several very different industries or lines of commerce. In addition, the making of long-term financial strategic plans not only required decisions bearing on the future use of existing facilities, employees, and funds, and the development of new resources in the business current lines, but also required financial decisions having to do with new lines of products and with the dropping or curtailing of old ones (Crowley n.d.). I found that the modern financial system created administrative problems that could not be handled by the exceedingly centralized types of organizational structure that by 1990 had developed to supervise the production of single articles or product lines. Because of the significance of technology and the new services to economic growth in the 20th century, one would expect to find a record of rising financial expenditures on research and development (Spulber, p. 87).

Current financial records do certainly show ineffective economic policies of the state, but given the purposes for which most such financial expenditures have been made, in general, they have probably not yielded the impact on economic growth that a more ideal set of purposes would have allowed. The most striking and real-life examples of the problems were cited by Botz (2009). The author states:

With private sector and public sector workers losing their jobs, more families would quickly exhaust their savings, lose their homes, and increasing numbers of those who rent would be evicted. The homelessness of working-class families would rise beyond the capacity of government and charitable institutions. The condition of the African American and Hispanic workers will be much worse than that of the white workers, and that will be quite bad.

This example shows that a real crisis in America was affected by the economic and financial manipulations of the government and its ineffective policies during the last 10 years. The example allows me to say that mass production held out the promise of economies of scale or reduced costs per unit of output over a wide range of output. To achieve production in high volume, however, required enlarged plant and equipment (Crowley n.d.). The latter, in turn, required not only financial feasibility, but the adequacy of business: not only must the nations stock of knowledge  and not least its administrative skills -react to the demands of more financial tasks, but capital markets must also respond. These responses, as the society shall see, were indeed forthcoming, and in the resulting discussion, I shall emphasize particularly the institutional financial changes that made the responses possible. It is rational to believe that these financial changes, together with the economies of scale flowing from the financial markets to manufactured goods in large volume, created most of the productivity gains realized during the period. The financial sources of demand for capital in the rapidly developed economy could not be more clear (Hughes and Cain, p. 87).

The best policies that worked in other countries were the support of all types of business and reduced taxes for all citizens. Capital formation was financed, and finance required savings. In terms of economic theory, surpluses of capital can exist in mature economies only, and reforms are less attractive there than in areas of capital deficit. The example of 1930s in America showed that most of the investment went into municipal and other local bands, and into railroads and public utilities, although a few manufacturing firms were also among the recipients. English investors were the primary source of the flow (Crowley, p. 87). The issue is a difficult one both because of the number of financial forces that may have contributed to this result and because of the scarcity of our information about them. Among the many financial and economic factors upon which savings depend is the level of income; the degree of inequality in its allocation (the greater that inequality the larger the financial savings, since it is receivers of large financial incomes who do most of the saving); and a variety of conditions affecting the value of financial savings  including interest rates, the price level, living standards, and the financial effects of technological change upon available products and services (Heilbroner and Singer, p. 54). I found that the typical poor American family of today can buy as much food as the average American worker could buy 40 years ago, and, in addition, people have better housing, more clothing, furniture, heat, and high-quality medical care. 49 % of our officially poor families own automobiles. 500,000 own more than one car. In absolute terms, then, Americas economic growth has increased the level of material well-being of the average family.

The best solution for the American economy is to support production, financial institutions, and reduced taxes for all citizens. Yet because increasing affluence has led society to elevate its notions of what constitutes poverty, the relative position of the poor has changed hardly at all. I suppose that the productivity-enhancing issues of modern technology  which, once again, include the organizational and administrative changes in thinking and strategies I have just discussed  have been truly impressive, and there is hardly any nation in the world that would turn its back on the betterment of living standards that it has made achievable. This does not mean that great business and financial corporations promote efficiency and growth more decisively than smaller specialized firms. the financial crisis can be overcome by reduced taxes, social support policies, and reduced government interventions in the business sphere.

Works Cited

Botz, D. L. Economic Crisis, the American Working Class, and the Left: The Situation Today and the Situation in 1930. 2009.

Crowley, Obama should beware the growing anger in America. The Observer. 2009.

Fishback, P. V., North, D. C. Government and the American Economy: A New History. University Of Chicago Press, 2007.

Heilbroner, R., Singer, A. The Economic Transformation of America: 1600 to the Present (v. 1) Wadsworth Publishing; 4 edition, 1998.

Hughes, H., Cain, L. P. American Economic History (7th Edition) (Addison-Wesley Series in Economics). Addison Wesley; 7 edition, 2006.

Spulber, N. Managing the American Economy, from Roosevelt to Reagan. Indiana University Press, 1989.

Introduction: Defining Deficit Spending

In order to gain an in-depth understanding of the economic outcomes of the Great Recession and other financial catastrophes, it is crucial to grasp the concept of deficit spending. The media has been the source of public dismay concerning the massive national debt, which continues to grow during the pandemic. NPR reports that the U.S. budget deficit soared to a record $3.1 trillion, following a massive surge in government spending aimed at containing the economic damage from the coronavirus pandemic (Zarroli, 2020, para. 1). A budget deficit is created when the government spends more money than it makes in corporate taxes and other sources of federal income. Thus, the deficit drives the overall amount of money a country has to borrow, which contributes to the national debt. In short, debt is the cumulative amount of money the government has borrowed throughout our nations history  essentially, the net amount of all government deficits and surpluses, according to the Center on Budget and Policy Priorities (2020, para. 1). When the economy struggles, the government spends significantly more on safety net initiatives and collects less in taxes, which is why the deficit grows during a recession.

Advantages

Economists often recommend increasing deficit spending to put an end to a recession or moderate its impact on the economy. Deficit growth can play a beneficial automatic stabilizing role, helping moderate the downturns severity by cushioning the decline in overall consumer demand (Center on Budget and Policy Priorities, 2020, para. 5). Therefore, the governments excessive spending can be justified by the possibility of creating more jobs and helping the country recover from a recession much faster. Additionally, resulting in economic improvements, increased deficit spending positively affects the outlook for businesses, which leads to more investments (Thoma, 2011). Thoma (2011) notes that deficits allow to purchase infrastructure and spread the bills across time similar to the way households finance the purchase of a car or house, or the way local governments finance schools with bond issues (para. 2). Thus, it is important to recognize that deficits are not always bad for the economy although they contribute to the growth of the national debt. Increasing deficit spending can, in fact, help the economy recover and battle unemployment.

Disadvantages

Under certain circumstances, when the government increases deficits and continues to borrow large sums of money, deficit spending results in lower investments and inflation, which contribute to a vicious cycle of debt. Aside from recessions, the government can face a structural deficit even though the economy functions at its fullest capacity. This way, excessive government spending is unjustified, which means that borrowing has harmful effects on private credit markets and hurt economic growth over the long term (Center on Budget and Policy Priorities, 2020, para. 5). When it comes to deficits, another source of worry is their monetization leading to inflation (Thoma, 2011). As the government prints more money, an additional inflow of fresh currency into the private sector leads to market demand exceeding market supply. If people suddenly have more money to spend, they try to purchase items that are usually in limited quantities. Inflation is unlikely during a recession since there is an excess supply of goods (Thoma, 2011). Thus, it is evident that the outcome of increased deficit spending is positive only in the short-run, particularly if the economy is struggling.

Crowding Out Effect

To grasp the full scope of the potential impact of deficits, it is crucial to discuss the crowding out effect. Slavikova (2018) describes the effect as a macroeconomic concept that explains how increased central government activity negatively affects the involvement of other actors in a particular sector of an economy or a market (p. 96). Deficits cause interest rates to go up leading to deceased investment, which then translates into lower output and economic decline. Investment funds a limited, which is why when the government competes with the private sector for a share (to fund its excessive spending), interest rates increase significantly (Thoma, 2011). As a result, more government spending and less activity from the private sector leads to a less efficient utilization of resources. Hence, even if the economy is in recession, the government has to consider the negative effects of increased deficits, including the crowding out effect.

Conclusion

To sum it up, mass hysteria over the U.S. massive national debt is somewhat justified. The COVID-19 pandemic has been the overwhelming factor driving deficits higher. Increased deficit spending has been a rational response from the government to keep as many people employed as possible and help the economy recover. However, apart from playing a stabilizing role, deficit spending has many disadvantages, including lower investments, inflation, as well as the crowding out effect. Therefore, applying the deficit strategy during a recession in the short-run is beneficial. However, increasing deficit spending in order to reach long-term goals has many unjustified risks. Additionally, when the government borrows money from external (foreign governments) and internal (commercial banks) sources during good times, it can have harmful effects on the private sector and hinder economic development.

References

Center on Budget and Policy Priorities (2020). Policy basics: Deficits, debt, and interest. Web.

Slavikova, L. (2016). Effects of government flood expenditures: the problem of crowding-out. Journal of Flood Risk Management, 11(1), 95104. Web.

Thoma, M. (2011). Government deficits: The good, the bad, and the ugly. CBS News. Web.

Zarroli, J. (2020). $3.1 trillion: Pandemic spending drives the federal budget deficit to a record. NPR. Web.

Technological advancements in the field of transportation are essential to consider when discussing the subject of economics. Several researchers state that the period from 1865 to 1900 manifests a significant rise in nationwide profits in the United States, spurred by the transport system changes (Rosenberg 50). In this essay, the main factors of increasing economic growth through transportation will be discussed, and the reasons for such a connection will be presented.

The systems of transport have an incremental role in the countrys affluence. The ability to successfully transfer various goods can significantly impact the traders success, thus contributing to the economic expansion of the whole region (Rosenberg 115). The period between 1865 and 1900 has been referred to as the American economic expansion, which signifies the importance of these years in the global development of the USAs commerce (Rosenberg 115).

During these times, imperative advancements to the transportation system were implemented, namely the improvements to the railroad network (Rosenberg 117). The transportation revolution that transpired from 1815 to 1860 made it possible for the railroad complex to advance into different regions and countries, such as Canada and Mexico (Nettels 250). Supporting the trade with the business organizations from these states allowed the USA to expand its economic influence, securing the transfer of various goods and services (Rosenberg 172). Altogether, the growth of the railroad system that followed the transportation revolution was an essential part of the USAs economic advancements.

A lucrative trading connection requires fast rates of transportation to stay profitable. In the years between 1865 and 1900, excessive delivery times and costs significantly decreased the income received from this enterprise (Rosenberg 158). In order to acquire exceptional results of trade in this field, it was necessary to develop a more efficient system of transfer (Rosenberg 158). This process was made possible by recent technological advancements, which improved the steamship and railroad systems (Rosenberg 159). Lower shipping times remarkably elevated the amount of produce that could be transported, thus increasing financial surplus and contributing to the economic expansion (Pascali 2823). The technological changes to the systems of transport yielded significant outcomes for the American economy.

It is imperative to consider the effects of integrating a quality delivery complex. The railroad network is believed to be one of the most exceptionally developed in the period discussed, allowing the transfer of goods and services between remote regions (Pascali 2824). As this structure grew larger, it slowly became extensive, lowering prices and creating a transportation option affordable even for small local businesses (Pascali 2824).

The involvement of private organizations was an essential factor in the economic expansion between 1865 and 1900. Furthermore, promoting the development of transportation systems was highly beneficial for both the government and corporate investors, as it increased their economic range and generated more income from distant areas (Pascali 2824). In the long term, such benefactions proved to be highly profitable, further raising the contributors interest (Pascali 2825). It appears that both the American state and large business owners donated monetary resources to the transportation advancements to secure the financial success of their enterprises.

To conclude, several factors related to the development of transport systems can be beneficial to a specific countrys economic growth. Stable connections between the state and its neighboring nations improve the trading relationships and generate additional income, thus expanding the economic range. The improvements to the railroad complex, as well as the sea transport, significantly impacted the expansion of financial resources of the United States between 1865 and 1900.

Works Cited

Nettels, Curtis. The Emergence of a National Economy, 1775-1815. Routledge, 2017.

Pascali, Luigi. The Wind of Change: Maritime Technology, Trade, and Economic Development. American Economic Review, vol. 107, no. 9, 2017, pp. 28212854.

Rosenberg, Nathan. Technology and American Economic Growth. Routledge, 2020.

Introduction

Evolutionary economics is mainly concerned with the study of the processes involved in the transformation of global and local markets. The field focuses on economic changes in relation to industries, firms, and institutions. It also analyses the impacts of these developments on employment, trade, growth, and production (Dopfer, 2005). The transformation is perpetuated through actions of agents, which are characterised by interactions and experiences. The development is reviewed with the help of evolutionary methodologies (Andersen, 2009).

In the current paper, the author will analyse evolutionary economics from the perspective of Joseph Schumpeter. To this end, a review of Schumpeters model of economic development will be provided. The main features of this scholars evolutionary economics will be analysed. The features addressed include innovativeness and entrepreneurship, technological competition, as well as profits, credit, and capital.

Evolutionary Economics: Background Information

According to Witt (2002), evolutionary economics entails the analysis of the processes associated with technological and institutional innovation. The processes are analysed through generation and testing of different ideas. The aim is to discover and accumulate value for incurred costs as opposed to their competing alternatives (Andersen, 2009).

Evolutionary economics is closely related to mainstream economics. It is also linked to the heterodox school of economic thought, which is anchored on evolutionary biology. According to Dopfer (2005), this branch of economics is similar to its conventional counterpart, given that it places emphasis on complex interdependencies. It also draws attention to growth, competition, resource constraints, and structural change. However, critics have raised concerns with the approaches utilised by conventional economics in analysing the various elements listed above.

In mainstream economics, the main argument is based on rational agents and scarcity. The two are treated as interdependent elements. Consequently, rational choice with regards to a given agent is defined as the straightforward practice involving mathematical optimisation (Witt, 2002). Complexity economics is growing at a high rate in contemporary society. To this end, economic systems tend to be treated as evolutionary elements (Witt, 2002).

According to Andersen (2009), Schumpeter proposed what can be regarded as very radical ideas during his time. His ideas focused on an evolutionary economic approach to growth and changes (Andersen, 2009). In his book The Theory of Economic Development, Schumpeter elaborates on this approach to economics.

In this work, Schumpeter bases his theory on a number of assumptions. The presumptions take into consideration the importance of macroeconomic equilibrium (Schumpeter, 1934). Macroeconomic symmetry is regarded as the normal mode of economic affairs in actual life (Dopfer, Foster & Potts, 2004). Schumpeter views the equilibrium as an element that is continually destroyed by entrepreneurs in their efforts to introduce innovations in the market (Schumpeter, 1943).

According to the evolutionary approach to economics, innovations that are successfully made part of the society alter the normal operations of fiscal life (Andersen, 2009). The alteration occurs given that some of the already existing means and technologies of production lose their positions in the economy (Andersen, 2009).

The study of economics is basically concerned with the financial welfare of members of society. It is also interested in the alternative means of improving this welfare. Consequently, the various schools of economics focus on this aspect of human life. The schools of thought referred to include, among others, the neoclassical, Keynesian, classical, and neo-Schumpeterian approaches (Kurz, 2008). However, there are subtle differences between the strategies used by the various perspectives as far as analysing economics is concerned. The major difference is in relation to the emphasis put on the different stages of economic analysis. Other variations touch on detailed interrelatedness of elements (Dopfer, 2005).

According to Kurz (2008), neo-Schumpeterian approach to economic growth places emphasis on the essence of long-term changes. In addition, it assesses the crucial purpose of innovation in economic development. In essence, Schumpeters approach regards capitalism as an evolutionary process. The process entails continuous innovation and creative destruction. The evolutionary perspective proposed by Schumpeter is characterised by a number of unique features. The elements determine the strengths and weaknesses of the approach.

An Analysis of Schumpeters Model of Economic Development

Schumpeters theory of economic change is based on the assumption that perfect and competitive economies exhibit stationary equilibrium. Profits, interest rates, involuntary unemployment, investments, and savings do not exist in such an ideal setting (Schumpeter, 1934). According to Dopfer (2005), the state of equilibrium is characterised by what is referred to as a circular flow. The reason is that the process repeats itself every year. The circular motion implies that the same products are developed in the same manner over time.

Schumpeter (1934) argues that economic development is a spontaneous process. In addition, there are irregular changes within the circular flow channels. Disturbances alter and displace the previously existing state of equilibrium forever (Schumpeter, 1934). As such, development entails the implementation of new combinations of different possibilities. The potentials exist within the stationary state (Andersen, 2009). New combinations result from innovations (Dopfer, 2005).

Features of Schumpeters Evolutionary Model

Introducing the features

The evolutionary economic development model exhibits a number of outstanding aspects that constitute its foundation. According to Dopfer et al. (2004), Schumpeters theory was not meant to substitute other perspectives of economic development at the time. On the contrary, it sought to complement these frameworks. The previous models included, among others, static equilibrium theory. The theory was formulated by Walras.

In his theoretical framework, Schumpeter emphasised on economic change resulting from innovation. It is a fact that innovation has a number of implications for modern society in impacts on, among others, the social and political aspect of human life. Schumpeter focused on the economic aspect of these implications. According to Schumpeter (1939), the changes in the economic process brought about by innovation, together with all their effects and the responses to them by the economic system, (can be referred to as) economic evolution (p. 86). What this means is that just like other structures in human society, the economy is not a static phenomenon. It undergoes a number of changes as a result of various factors in society.

The following are some of the key features of Schumpeters evolutionary model:

Innovation and entrepreneurship

One of the major elements associated with Schumpeters evolutionary approach to economic development is innovation. The scholar developed his theories on the basis of innovations, how they arise, and how they affect life. The central argument in the theoretical framework is that economic development entails the introduction of new combinations (Schumpeter, 1934). According to Schumpeter (1934), these groupings arise from, among others, innovations. The realisation creates a link to be these innovations and the evolutionary process.

Schumpeter (1934) defines innovation as (the) new combinations of, among others, resources and equipments that are already in existence (Schumpeter, 1934, p. 65). The new mixtures are labelled as entrepreneurial functions. Innovations in Schumpeters model take various forms. For instance, they may include the introduction of new methods or products.

They may also entail the exploitation of new markets and other resources (Doper et al., 2004). In addition, innovations can also include exploitation of new sources of raw materials or exploration of other organisations, such as monopolies. Schumpeter postulated that the introduction of new products, as well as the continuous improvement of those in existence, leads to development.

Schumpeter defines entrepreneurial functions as those elements characterised by the process of carrying out new things. In addition, the functions may involve doing things that are already being done, but in new ways Schumpeter, 1939, p. 34). The whole process ends up in innovation. In addition, Schumpeter argues that it is important to distinguish between innovation and invention. According to Kurz (2008), if inventions are not executed and put into practice, then they become irrelevant to the process of economic development. Turning inventions into tasks requires aptitudes that are different from those involved in innovation.

Schumpeter (1943) continues to argue that entrepreneurs can also play the role of inventors. In addition, they can be capitalists. Finally, they can also be innovators, albeit by chance (Schumpeter, 1934, p. 89). According to Kurz (2008), Schumpeter emphasises on the various differences between inventions and innovations. The reason behind the emphasis is the fact that he (Schumpeter) regards innovation as a function or a form of social activity. The function is carried out within the economic sphere for a specific purpose (Reisman, 2004). On the other hand, inventions can be carried out anywhere. For example, they can be performed in universities without any intention to commercialise the undertaking (Witt, 2002).

In the evolutionary approach, the entrepreneurial function has to be analytically distinguished from the functions of the other players in a firm (Reisman, 2004). For instance, with regards to financiers and capitalists, the function of bearing risks is not part of the mandate carried out by the entrepreneur and the manager (Kurz, 2008). Managers are only responsible for the daily operations of the organisation.

Schumpeter establishes a close relationship between entrepreneurship and innovation. The role of the innovator is assigned to the entrepreneur as opposed to the capitalist (Schumpeter, 1943). The entrepreneur is regarded as an individual who possesses administrative skills that are beyond the ordinary.

In addition, they are capable of introducing entirely new things into the firms system. Consequently, the entrepreneur must be motivated to enhance their productivity. Some of the motivating factors include the desire to develop private commercial legacies. Others include the will to prove their superiority. The industrialist may also be driven by the desire to develop new things, exercise their ingenuity, and display their energy.

According to Reisman (2004), entrepreneurs and innovators play a significant role in economic development. To realise their goals, investors require a number of items. For instance, they require technical knowledge in order to come up with new developments (Cooke, 2002). In addition, they need the power to dispose of other factors through credit (Dopfer, 2005).

It is apparent that a number of factors inspired Schumpeter to come up with the various distinctions. According to Andersen (2009), Schumpeter wanted to develop a mental lexicon, which would enable him to focus on innovation in isolation of other related activities. His contemporary, Max Weber, shared similar viewpoints as far as economic development is concerned (Witt, 2002). Marx also argued for the importance of developing ideal types in relation to social phenomena (Reisman, 2004).

According to Dopfer et al. (2004), a number of Schumpeters postulations are vague. For instance, he did not clarify about the new combinations. The relationship between the new aggregations and others (those in the past and in the future) remains unclear. In later studies, Schumpeter utilised such terms as creative destruction and industrial mutation to refer to the same phenomenon (Schumpeter, 1943, p. 83).

According to Kwasnicki (2000), a number of conclusions can be logically drawn from Schumpeters postulations. For instance, new innovations can be viewed as the creative aspect of his theory. Consequently, the combinations build on (and substitute) the old innovations in a synchronised fashion (Andersen, 2009). The existing developments constitute the destructive element.

Technological competition

The other major element of Schumpeters evolutionary economic development model is technological competition. According to Andersen (2009), Schumpeter built on the existing idea that capitalist development is based on technological competition between business organisations. According to Andersen (2009), Marx had theorised how capitalist firms could remain competitive. One way to achieve this involves increasing productivity through the introduction of additional machinery to enhance efficiency.

As a result of new technologies, firms stand a chance of improving their competitive edge in the market (Schumpeter, 1943). Another benefit of technological innovation involves an increase in profits. The firms that fail to implement these changes are characterised by reduced returns on investment and decreased profit margins. They are likely to be driven out of business by competitors (Ziman, 2000).

The implication of innovations on the aggregate economy touches on capital accumulation. The accumulation goes together with rising productivity (Kwasnicki, 2000). According to Ziman (2000), Schumpeter adapted Marxs argument in his model. He turned the borrowed idea into the main exposition factor in his analysis of evolutionary dynamics. For Schumpeter, competition based on technology reflects the true nature of rivalry in a capitalist setting. The viewpoint contradicts price-competition, a popular concept expounded by other economists.

Schumpeter expounded further on Marxs arguments. He achieved this by introducing the broad concept of innovation. According to Dopfer (2005), Marx had limited his argument to the analysis of mechanisation, which entails process innovation. However, additional elements are made apparent in Schumpeters evolutionary model. For instance, such issues as the development of new products and the introduction of new types of raw materials are addressed. Other elements, such as the creation and exploitation of new markets, intermediary products, and newer methods of organising businesses are also made evident (Kwasnicki, 2000).

According to Schumpeter (1939), economic rewards linked to successful innovation are naturally transitory. Once sufficient imitators successfully enter into the market, the rewards tend to vanish (Cooke, 2002). However, Schumpeter is of the view that the interaction between innovation and imitation has an effect on economic growth. In essence, invasion by imitators and the introduction of successful innovations has major implications on the market.

The growth of the industry or sector associated with the innovation will remain high for a given duration of time (Dopfer, 2005). Derived effects may be experienced in related fields since one innovation has the tendency to induce and facilitate similar developments in other areas (Cooke, 2002). A number of systemic interdependencies are made evident as a result of the innovations. The development takes place in particular sectors and their surroundings (Cooke, 2002). For a given period of time, the surrounding economic sectors will exhibit higher growth compared to the rest of the economy.

The positive growth in the affected cluster is bound to slow down with time. Ultimately, recurrent tendencies of such development clusters and the repetitive pattern result in business cycles. The cycles may vary in length (Schumpeter, 1939). According to Schumpeter (1939), business cycles have their origins in technological competition. The rivalry impacts on the said long waves of economic activity.

The analysis of long term economic activities is credited to Kondratieff, a Russian statistician (Schumpeter, 1943). According to Cooke (2002), Schumpeter provided warnings touching on the long waves. In essence, the waves should not be linked to any particular form of innovation carried out in the same era. On the contrary, they should be attributed to the commercial processes carried out during that particular period.

According to Cooke (2002), the argument by Schumpeter in relation to long waves and business cycles is complicated. It is characterised by a detailed diachronic analysis. Schumpeter does not propose a mono-explanation with regards to the phenomenon of long waves. Cooke (2002) argues that the hypothesis by Schumpeter in relation to technological competition and business cycles was criticised fiercely by other scholars. The critics argued that Schumpeter fails to provide adequate proof to support his explanations of the alleged waves.

Profits, credit, and capital

According to Kurz (2008), Schumpeters model of economic development highlights a number of issues related to credit. To this end, the concept cannot be separated from entrepreneurial action (Schumpeter, 1943). It is noted that credit mechanisms play a significant role in the economic development process. The importance is amplified when one takes into consideration new combinations and the moving of production into new channels (Cooke, 2002).

Schumpeter (1939) regards the entrepreneur as a typical debtor. The agent is likely to exist within a capitalist society. To provide a clear picture of the importance of credit in growth, the approach is linked to the economic domain of society. The sector has both capital and economic aspects (Kurz, 2008). According to Dopfer (2005), Schumpeter postulates that capital is the lever through which the entrepreneurs control the concrete goods that they need. Consequently, the capital provides a means through which factors of production can be diverted to new uses.

Entrepreneurial profits are regarded as temporary productive factors if they result directly from innovation (Reisman, 2004). The entrepreneur is regarded as an individual with the capability of initiating action. Consequently, their role in the economy is regarded as indispensable. In light of this, Schumpeter (1939) advances that although the means of production can be replaced, an entrepreneurial leader cannot. When this perspective is adopted, entrepreneurship is separated from profits and other aspects of production. Such elements include remunerations for employees, rental expenses, and return on capital.

According to Reisman (2004), Schumpeters model of interest on capital relies heavily on entrepreneurship and the accruing returns. Consequently, from Schumpeters perspective, it is apparent that interest constitutes a significant part of the economic development process. According to Schumpeter (1939), interest should be regarded as a value phenomenon. In addition, it should also be viewed as an element of price.

In the opinion of Kurz (2008), profits are surpluses arising from costs. Schumpeter postulates that there are no profits under competitive equilibrium. The reason for this is that the price of each product is equal to the cost of production. Entrepreneurs innovate for profits. As such, dynamic changes in innovations are also bound to generate these benefits. Consequently, profits facilitate economic growth. They persist until the innovations become generalised (Kurz, 2008). Interests originate from a number of technical elements. The elements are closely related to the entrepreneurs profits. Consequently, Schumpeter portrays the entrepreneur as a crucial agent in economic development. However, their significance is not pegged on their value as interest receiver. On the contrary, their importance is related to their role as payers (Reisman, 2004).

Conclusion

Schumpeter is regarded as one of the most prominent pioneers of evolutionary economics. It is important to note that the subject persisted even after his death. Some of the terminologies used in this field vary depending on the time of their creation and utilisation. However, most of the scholars agree with Schumpeter that innovation is the driving force behind economic development.

As innovation increases, the degree of variations in society also rises. The development enhances the dynamic element of the economy. Lack of innovation is associated with economic stagnation and undefined growth. A critical review of Schumpeters evolutionary approach to economic development indicates that the process is characterised by irregularities. For instance, under the evolutionary approach, the economy exhibits sequences of innovation and imitations. The review also makes it apparent that the other features of Schumpeters evolutionary perspective are closely linked to innovation. The features include innovation and entrepreneurship, technological competition, profits, credits, and capital.

References

Andersen, E. (2009). Schumpeters evolutionary economics: A theoretical, historical and statistical analysis of the engine of capitalism. New York: Anthem Press.

Cooke, P. (2002). Knowledge economies. London: Routledge.

Dopfer, K. (2005). The evolutionary foundations of economics. Cambridge, UK, Cambridge University Press.

Dopfer, K., Foster, J., & Potts, J. (2004). Micro-meso-macro. Journal of Evolutionary Economics, 14(1), 263-279.

Kurz, D. (2008). Innovations and profits: Schumpeter and the classical heritage. Journal of Economic Behavior & Organization, 67(2), 263-278.

Kwasnicki, W. (2000). Monopoly and perfect competition: There are two sides to every coin. In P. Saviotti & B. Nooteboom (Eds.), Technology and knowledge: From the firm to innovation systems (pp. 34-50). London: Edward Elgar Publishing.

Reisman, D. (2004). Schumpeters market: Enterprise and evolution. Northampton: Edward Elgar Publishing, Inc.

Schumpeter, J. (1934). The theory of economic development. Cambridge, Mass.: Harvard University Press.

Schumpeter, J. (1939). Business cycles: A theoretical, historical, and statistical analysis of the capitalist process. New York: McGraw-Hill.

Schumpeter, J. (1943). Capitalism, socialism and democracy. New York: Harper.

Witt, U. (2002). How evolutionary is Schumpeters theory of economic development?. Industry and Innovation, 9(1), 7-22.

Ziman, J. (2000).Technological innovation as an evolutionary process. Cambridge: Cambridge University Press.

Among the factors that define economic growth and development, human resources and unemployment are considered to be the most vital. The well-trained and educated labor force has a significant and direct effect on the economy by producing a high-quality product. However, the problem is not only in finding sufficiently trained workers but in the inability to create workplaces for them. In many countries, some individuals are available and ready to work, yet they are not able to find a suitable job.

According to The Economics Daily, the current rate of unemployment in the U.S. is only 3.6 percent, which is low enough to consider the United States a country with a developed economy. However, even the U.S. faces problems related to unemployment that harm the countrys economic development. Part of the U.S. economy outcome is spent on personal consumption and unemployed workers, which leads to GDP reduction and inefficient allocation of the countrys resources.

From the previously discussed U.S. economic pattern, it is evident that Turkey, whose unemployment rate is 13.3 percent, will experience its effect on the economy to a much greater extent. The main concern with unemployment rates in Turkey is that it varies between the regions, which causes a massive gap between social levels. Also, the main factors that have an influence on the decreasing economic development of Turkey are women and youth unemployment and the inability to provide workplaces for the considerable workforce.

To conclude, unemployment rates have a significant adverse effect on the economy of both developed and developing countries. It is an efficient tool in defining whether a countrys economy is developed or not. Usually, countries with an improved economy can provide the well-trained and educated people with work, while countries with developing economies are unable to meet the number of workforce.

Abstract

Currently, there have been talks about economic growth and trade. As well, there has been the issue of economic growth and environmental conservation which has become a global issue. This means that there should be a way of addressing this global issue while at the very time encouraging global trade. This is the reason why there has been the move towards trading in Environmental Goods and Services which can improve the environmental quality while promoting economic growth and development. It would be important that environmental conservation should be seen by all people as one of the most important achievements that can be registered by man. This is so because the integrity of the environment is what determines the living conditions of the people and how nature influences their lives. This paper gives an analysis of how trading in environmental-friendly goods and services may be important in improving the quality of the environment and at the same time promote economic initiation and development, which has been a current economic problem.

Introduction

There can never be any doubt that the world can make a big contribution in fighting climatic changes by ensuring that we have opened markets that deal with clean goods and services that will not harm the environment. In that case, there have been a number of negotiations on trade offering avenues for the access of goods such as air filters, scrubbers and any other services that will help in the management of energy (Robert, 2003). The Environmental Goods and Services sector, ENVIRONMENTAL GOODS AND SERVICES is made up of a number of producers and manufacturers of goods, services and technologies, dealing with products that will help in environmental conservation. These products have been designed so that they can effectively help in controlling, measuring, preventing, and restoring the damages that have been done to the climatic patterns and the environment as well. Other forms of damages done to the environment include increased wastes, noise pollution, damaged landscapes and ecosystems and even biodiversities. Therefore, it means that these goods and services should be integrated with cleaning technologies that will help prevent or reduce the rates of pollution to our environment. Currently, this has been a major global economic issue (Robert, 2003). This is because there is the need to improve economic growth while at the same time maintaining a quality environment. This is what has led to the improved trade-in Environmental Goods and Services.

Background Information

The definition of Environmental Goods and Services has been something highly debated. But that being the case, it would be true to note that one cannot fail to give an acceptable definition, and hence ENVIRONMENTAL GOODS AND SERVICES will be used to refer to all the actions, services, or products that are not directly exploitative of the natural environmental settings. Having this definition in relation to production, we can say that these ENVIRONMENTAL GOODS AND SERVICES would be friendly goods and services to the environment which shall improve economic growth through trade while at the same improving the quality of trade and environmental conditions. These will include organic products, eco-tourism, and ecosystem-certified woods together with their products. Therefore, it will be agreed that these are goods and services will be effectively aimed in the improvement and conservation of the environment in which man dwells. This means that such ENVIRONMENTAL GOODS AND SERVICES will definitely result in a sustainable environment. Therefore, this leads us to the definition of Environmental Sustainability (Ekins, 2000). Environmental sustainability is nothing much but the strategies and operations aimed at ensuring that all the needs of man are met without compromising or destroying the available resources for the generations of the future. Today, all the operations carried out by man should hence be aimed in the achievement of a sustainable environment. That being the case, any move aimed at achieving any form of environmental sustainability would encompass the processes such as improving the ecosystems, keeping all populations in check, conserving the environment, and at the same time reducing all factors and human activities that stand a threat to the environmental dynamics (Robert, 2003).

Current Congressional Views

There have been current views that have been voiced by different individuals from different parts of the world towards the issue. From these current congressional views, it would hence be important that we appreciate any idea that will result in the conservation of the environment. It is very true that human beings were given the mandate of controlling and caring about the environment. Current concerns are aimed at ensuring that there would be an overall improvement on the economy only if there would be proper maintenance of the economy. This has caused many individuals to suggest a move towards improving overall trade and cutting down trade on some of the goods and services that might damage the economy. This has been seen by the greatest majority as the appropriate approach since it would resolve two things or issues at the same time. It would hence be something important in putting a man on top when it comes to his contribution in disrupting the structure and co-existence in the environment.

In that case, it has been proposed that man should be keen in understanding that we entirely depend on this environment and its natural resources for us to exist on earth and the reason maximum conservation is inevitable, and by so doing cater for the future generations. It has been suggested that it would be greatly necessary to trade effectively in these goods and services that will have positive impacts on the environment and not in any way harm the environment. This will be adopted as part of an implementation aimed at safeguarding the environment towards curbing all weather changes, climate issues, chemical emissions, and their compositions in the atmosphere. This is why this issue has been purely economic and a very big global issue. Without this kind of approach, then it shall be noted that the majority of the issues shall not be achieved and realized. As well, I purely think that this kind of trade operation might play a great role towards solving the current economic crisis and financial instabilities that have been facing the majority of the countries presently. Such a sustainable development shall play a very big role in increasing carbon intake and as a result in economic improvement (Robert, 2003).

Therefore, I totally feel contented that the world should today adopt this kind of trade on goods and services which would have positive implications on the environment. This will be part of a move in the conservation of our biodiversity. There would be the regulation of all gaseous emissions and their compositions in the atmosphere, the hydrological cycles, and issues of climate change, hence bettering the living conditions in the world. There is also the trading in a number of medical-related health drugs that are would mainly be derived from the dynamic environment and which shall not pollute or even harm the human environment. It would hence be necessary that this kind of trade in the ENVIRONMENTAL GOODS AND SERVICES is embraced because such goods and services play a major role in bringing about the economic developments and at the same time resulting in conservation and improvement of the environment (Robert, 2003). However, there have been a number of barriers and taxations that have hindered the trade in these goods and technologies. This has been a major barrier towards this kind of performance and hence it would be necessary that appropriate measures are put in place towards ensuring that such a global crisis is resolved accordingly. It would hence be very important that all efforts are designed towards eliminating these barriers in the trade operations so that there can be improved strategies for protecting the environment (Mattsson, 2005). Currently, current congressional views have been saying the same thing if the would is to achieve this stability.

From the current global news and reports, a number of countries have already lifted some of these barriers in trading operations of the Environmental Goods and Services. The move has seen an increase in the trade flows when it comes to these environmental products from both the developed as well as the developing countries. Another important thing is that majority of the World Trade Organization (WTO) members have also been making proposals towards the adoption of products that are preferable to the environment (David, 2004). Some of these products include objects like small bicycles and decomposing organic materials which can be listed to be among the Environmental Goods and Services. Today, it is only a small number of the developing countries and the least developed nations, who are members of the WTO, making many market-opening strategies concerning these goods. In that case, there should be a policy that would describe the originality and workability of the present negotiations on trade and also explain all the positions that different nations have taken and what has to be done next. There should be an examination of all the existing barriers when it comes to the trading of such goods and how such barriers can be reduced or done away with once and for all. In that case, it would be much easy to have free trade in these goods and by so doing increase environmental benefits and trade liberalizations (David, 2004).

Policy Implications in Trading in Environmental Goods and Services

From this kind of approach when it comes to the trading of these goods, it would be necessary to have their trade perfected so that the environment conservation measures can go the right way. This means that there should be the realization of policies that will have to be adhered to by all nations which sign the trade treaty towards improving the economy while at the very time conserving the environment. This is to say that there would be positive policy implications from the move. For instance, we have a number of goods and services that will facilitate measures for pollution management in the environment. Policies would come up with ways of mitigation hence leading to pollution control and management of our environments (Mattsson, 2005).

Therefore, trading on such goods and services shall as well play a key role in the management of waste-water and solid wastes as well. They shall also play a big role in helping in cleaning up soils, draining stagnant-surface waters, reducing any form of noise pollution and excessive vibrations, and in the very end bringing responsiveness on economic growth. Having reduced the trading barriers, the outcome is that the involved countries would be able to scale the heights in terms of economy. This should as well come up with ways of integrating the trading on goods that are of cleaner technologies. The clean goods and technologies are very important because they are very resourceful towards controlling and conserving our environment while at the same time improving economic performances. An example that can be enumerated here is like the use photovoltaic solar power. This kind of solar plant is automatically clean as compared to coal-fired plants, though both may produce equal power or energy quantities. It will therefore be agreed that the goods in this category of renewable as well as resourceful materials will be important in controlling any sort of indoor pollutions, the supply of water, and also help farmers manage their farms, fisheries and even forests effectively (Ekins, 2000). Therefore, the policies that have been realized with this kind of trade operations would be appropriate towards improving performance of different economies. The environment shall always be agreed to be the right thing that would propel the economy towards the right direction and hence it would be necessary that we begin with the environment before going ahead with other operations and economic motives (Hirsch, 2001). Therefore, environmentally friendly goods would as well include trading in goods that will be effective in conserving energy. Today, there are a number of firms and companies that provide services such as power and transport through the use of environmental-friendly means. In that case it would be necessary to have some companies and firms being given mandate so that they can freely involve in this trade by their efficiency in the provision of services that will play a big role in the conservation of the environment.

Trade in Environmental Goods and Services and Economic Growth

As experts argue, trading in Environmental Goods and Services would be the very first approach towards economic development and sustenance. Currently, trade on these goods and services have been a cause of conjecture, and hence the reason human kind has to adopt such a trade on the goods. We should therefore be willing to increase the access and use of Environmental Goods And Services because they will yield to a large number of advantages such as the control of environmental deteriorations by minimizing water, air and land pollutions. This would as well play a big role in helping towards the production of energy and other resource-friendly mechanisms that will not in any manner bring harm on the environment (Hirsch, 2001). This is the key reasons why people need to adopt the trade on the goods and services and be able to achieve the green revolution dream.

As well, the important thing here is in the need towards improving the economy, and making it stable at the same time. Today, we should encourage gradual liberalizations in trade affairs and make sure we also have carefully managed markets in all sectors dealing with the Environmental Goods And Services. This is the most outstanding thing with this adoption of environment friendly materials. It would be something great for man to be proud of the environment because a trade like this one on Environmental Goods And Services would bring about economic development and at the same time result in control of climate changes. This would be something very important and a key instrument towards the development of any given countrys economy through overall creation of opportunities for employment hence bringing better living standards.

There is a another correlation between this kind of trade and economic development through improvement in technology, and this is so because majority of the people shall be willing to come up with new ideas that will bring in new generation of newer products like power from non-exhaustible resources hence pioneering overall economic growth. Such skills in technology shall as well be transferred from one place to another in the entire world hence increasing chances for economic development and sustenance. This shall result in an overall increase in living standards for the people thus bringing an overall improvement on their health conditions. This would be so because people shall be living in safe and healthy environments which are free from any kind of wastes or pollutions. In short, we should be well informed about the importance of this kind of economic production and proliferation of Environmental Goods and Services which shall eventually result in overall economic performance. Once all these operations have been properly managed and organized within the trade liberalization, there would be an increased approach towards achievements for all developments that will be aimed at the improvement of all global economies (Jerry, 2003). Therefore, there should be increased liberalizations which shall help towards creating market opportunities in the trading of such goods and services hence improving the economy.

There should be overall encouragement of international trade so that different communities and nations can be willing enough in exchanging the products they have that will play a big role in the conservation of environment and at the same time improving the performance of different economies (Hirsch, 2001). All global nations should as well be willing to sign and effectively abide to all the signed treaties which have been aimed in conserving the environment. While at the same time improving the economic performance, it shall be noted the globe shall be able to come up with proper ways of addressing current issues to do with climatic changes, issues of pollution sand and even with current global warming. There should as well be opening of exportation opportunities for a number of nations so as to have more business operations which shall improve economic performance.

Conclusion and Recommendations

In conclusion, there should be the need to come up with measures which shall help in protecting as well preserving our environment while at the same time aimed in improving the economy. This has been the common talk each and every day in different countries, both the developed and the developing ones. This has led to the initiation of policies which have been aimed in improving performance and as well improving the climatic conditions. Currently, the issues of climatic changes and global warming have been on the limelight and hence it would be necessary that policies are derived which shall ensure that all economic operations are done in the right way towards improving overall performance. This should hence be integrated as part of the main measures useful in the achievement of the economic establishments and conservation of the ecosystem. In that case, the removal and overall reduction of tariffs in trade operations shall be a positive approach if the world was to realize a fully developed economy. This would also improve the chances of solving current economic issues which have been facing different nations like economic meltdowns and financial crisis (Jerry, 2003). There will also be the need to embrace technology so as to be able to come up with new ways of harnessing electricity from both air and water or from sea waves, and reduce consumption of coal. Environmental and economy experts should also be involved in the making of key policies that will help in achieving fair and free trade operations hence securing our environment. Therefore, the future solution for all the global worries and problems lies in the green revolutionary dream.

References

David, P. (2004). Global Trade and Environmental Impacts. Oxford: Clarendon Press.

Ekins, P. (2000). Economic growth and environmental sustainability: The prospects for green growth. London: Routledge.

Hirsch, F. (2001). Social Limits to Growth. Cambridge: Harvard University Press.

Jerry, A. (2003). Contingent Valuation: EGDs Assessment. Amsterdam: Elsevier Science Publishers.

Mattsson, L. (2005). Environmental Economics. Oxford: Oxford University Press.

Robert, K. (2003). Managing Natural Resources and Development. Cambridge: Cambridge University Press.