Term Paper on "Economic Development and Crises"

Term Paper 4 pages (1205 words) Sources: 3

[EXCERPT] . . . .

Economic Development and Crises

The modern day economy is currently confronted with the most challenging contexts since the 1929-1933 Great Depression. The contemporaneous crisis commenced within the United States real estate sector and gradually spread out across the rest of the industry sectors, as well as across the rest of the world.

Thomas Palley recognizes the role played by the real estate bubble and the excessive debts of the American population, but argues that the crisis was also generated by a series of macroeconomic forces, such as the inadequate economic model implemented at the basis of the U.S. economy growth, or the inadequate policies which regulated the economic community. At a general level, it is observed that the modern day financial crisis has been based on the same errors of other crises in the past and that these -- including real estate property prices, real equity prices, inflation, GDP growth and so on -- have followed similar paths (Reinhart and Rogoff, 2008). Only that, in 2008 in the United States, the trends were more severely manifested.

The financial crisis which has become internationalized has also generated problems outside the economic sphere, such as tenser international relations and social problems, but the bottom line of the impacts has been represented by the effects within the economy, which gradually generated effects at all other levels of life. At the level of the economic impacts, the most relevant of them include:

A restricted access to funds, which in turn translated into fewer investment opportunities

The restriction of business operations, of the costs or even the closing of firms through the bankruptcy legislations

Increasing unemployment rates

Restricted funds to research, development and technological advancements

Incremental pressures on the state budgets which were forced to offer more state aid in order to ensure the survival of the population.

In such a context, it becomes rather obvious that the internationalized economic crisis has put intense strains on the development of the global economy. The question refers to how the concept to economic crisis impacts the development of the economy. In order to answer the question, several sources would be consulted. The first of them is represented by Calum Miller's the human development impact of economic crises (2005). In this piece, the author focuses on the means in which the crisis impacts the employees.

This approach -- while it is rather specific and niche -- is necessary as the staff members represent the engine of economic growth. Traditionally, they were perceived as manual labor force necessary to operate the organizational machineries. Today however, they are regarded as the most valuable organizational asset. The modern day staff members have the ability to influence product quality, to generate customer satisfaction and loyalty, and to as such stimulate revenue sustainability. A change in their behavior would directly impact the final outcome of the company. In this order of ideas, it becomes imperative to analyze the means in which the economic crisis impacts the staff members, and subsequently, the overall economic development. Calum found the following:

Crises generally generate a decrease in the income of households, either through a reduction of the wages of the household members, either through the loss of the wage generated by the household members

With decreased financial resources, people come to spend less on life products and services. Consumption as such decreases, but the health of the population also decreases, especially as the workers spend less on healthcare

The impact on education is mixed, but situations are observed in which the tendency of enrolment in educational programs -- for both children as well as adults -- is decreased… READ MORE

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