Importance of the study of economics
This is an age of economics as people all over the world have become more economic minded. People living in the third world countries in particular have realized that the study of economics can provide a solution to their economic and social problems. Hence, provide a solution to their economic and social importance these days. We now discuss following.
A. Theoretical uses
B. Practical uses
Explanations of Theoretical uses
Explanations of Practical uses
Widening of mental horizon
The study of economics widens the mental horizon of the people because it enables them to understand the economic realities of life e.g. the usefulness of saving and investment, behavior of general price level, the need to boost exports and to control imports, the role of banking in business etc.
Adjustment with economic situation
We can learn to adjust to the ever changing economic situation of the country provided we have studied the subject of economics. We know that the problems of inflation. Unemployment, deficit in the balance of payment, the structure of taxes, agricultural, industrial, monetary and fiscal policies of the government affect all the people living in a country. Hence, all of us must have at least general awareness about economics to cope with any economic situation.
Sense of responsibility
Economics teaches us the importance of economic activities by which resources in the form of goods and services are produced for the satisfaction of wants. Thus, as responsible citizens of a country, we undertake economic activities to solve our economic problems.
Attitude toward thrift
The consumption theory in economics leads us to the maximization of utility by minimum expenditure and therefore it helps to develop an attitude toward thrift. This helps us to promote the level of saving and investment for growth and development of the country.
The working of economic system
By the study of subject of economics, we can learn the working of different economic system e.g. capitalism, socialism and Islamic economic system. This enables us to go for the best system for the welfare of the people.
Solution to economic problems
The study of theoretical and applied economics enables us to identify the economic problems of a country and leads us to measures for their solution. We know that Pakistan and India is inundated by economic problems like inflation, unemployment, population, explosion, agricultural and industrial backwardness, inequality of income distribution, deficit in the balance of payments etc. these problems are big obstacles in our way to economic development. Economics has given us the solution to these problems. That is why government of Pakistan and India is taking up concrete measures to solve the problems.
Optimum use of resources
There is a lot of wastage of resources in the third world countries which is mainly responsible for their poverty in general. Hence, they must learn the subject of economic development so that they are able to make the optimum use of the available resources. This can help them to raise their standard of living.
Guidance fir the finance minister
The finance minister who does not know economics will remain handicapped in his office.
Hence, he must learn the principles of economics, particularly public finance, so that he is able to implement the manifesto of the political party in power.
Guidance for industrialists / businessmen
Industrialists/businessmen must learn about the optimum combination of factors of production. Adjustment of supply with demand for stable equilibrium price in the market, boom and depression in business, export and import policies of the government, industrial policy and changes thereof etc. so as to become successful businessmen.
Protection of the rights of labor class.
The study of economics is especially important for laborers. It has made them aware of their exploitation by the entrepreneurs. They, therefore, have fought for their rights. As a result, they have got the right to organize trade unions, right to collective bargaining, minimum wage laws and fixation of working hours. Thus, the study of economics has enabled them to protect their rights.
Guidance for politicians
Economics is also named as political economy due to it’s to seek rooted relationship with political science, those who want to seek career in politics must learn economics as well. Economics is a science which enables politicians to make the manifesto of their political parties in which they can commit to solve the economic problems of the people such as the problems of food, shelter, clothing and education etc. moreover, politicians in power must know the fiscal and monetary structure of the country so that they are at least able to make budget of the state.
Fair distribution of wealth
It is an inherent tendency in a capitalist society that it leads to unequal distribution of wealth i.e the rich become richer and the poor poorer. This is highly dangerous because it can shatter the solidarity of a nation. By the study of economics we can learn about measures to check the tendency. Economics have always favored fair distribution of wealth in a country as they believe in growth with equity.
Importance for bureaucrats
Bureaucrats are running the economic institutions in third world countries like Pakistan. Most of them do not know much about economics. They must learn it so that they are able to use their entrepreneurial talents to run the economic institutions.
All the third world countries are poor countries. There is an acute shortage of human and physical resources in these countries. Moreover, the available resources are being misallocated. Development planning, an important branch of economics, provides solution to these problems. These countries have now learnt to make five year development plans for the optimum allocation of resources. It will help them to come out of the clutches of poverty.
Restraint of illegal sources of income
Economics acknowledge only those economic activities which are done within the framework of a constitution. Hence, it patronizes only legal sources of income. In other worlds, it discourages illegal sources of income like smuggling, black-marketing, hoarding and profiteering etc.
A change in social values
People in development countries like India and Pakistan follow orthodox and obsolete customs and traditions which involve wastage of resources. For example, a lot of unnecessary expenditures are made on marriage and death ceremonies in India and Pakistan. Such expenditures retard growth of saving and investment in the country. By the study of economics we can learn rational approach in the use of resources. It will be a pioneer force to bring a change in social values.
Political stability is a basic pre requisite for the economic development of a country because it enables the government to carry out long term economic policies. Hence, by the study of economics, we learn how to be peaceful citizens of a country so that the pace of a country’s economic growth is not retarded.