International economics and economic development
International economics seeks to understand the nature of international trade and financial linkages, to help formulate economic policy in both developed and underdeveloped economies.
Economic development - which deals with the core issues of economic growth, structural transformation and evolution of economic institutions – studies these processes within the broader context of an interdependent global economy.
Traditionally, the field of international economics is divided into two branches: ‘pure’ trade theory and trade policy; and open economy macroeconomics. Both branches are a necessary foundation if the two-way linkage between international economics and economic development is to be fully understood, helping in the analysis of issues such as the emergence of the Newly Industrialising Economies (NIEs) of East and South-East Asia, or the increasing importance of China and India in the world economy.
Development economics focuses on the economic transformation of developing countries, particularly what hinders economic growth and development. The scope of development economics is wide, including: a study of the nature of markets and other social institutions; the reasons why markets may ‘fail’ and the potential role of government policy; demographic issues such as population growth and migration; and the impact of development on the environment, income distribution, poverty and inequality.
It draws on theories developed in several areas of economics such as growth models, international trade and monetary economics, public economics, contract theory and incentives.
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