UNIVERSITY OF MUMBAI LAW ACADEMY,

MUMBAI

TOPIC

1. ECONOMIC GROWTH AND DEVELOPMENT

2. UNEMPLOYMENT AND WAYS TO TACKLE IT

FY BBA LLB Sem. II

Prof. Ashish Pawaskar

SUBMITTED BY: Ayush Tiwari

ROLL NO.:12
CONTACT NO.:8948294793
GMAIL: ayushtiwariorai@gmail.com

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 INDEX

Contents
UNIVERSITY OF MUMBAI LAW ACADEMY, MUMBAI..................... 1

What is Economics?........................................... 3

Three Basic Economic Problems................................ 3

1. What to produce? ........................................ 3

2. How to produce? ......................................... 3

3. For whom to produce? .................................... 4

Economic Growth and Determinants............................. 4

Introduction ............................................... 4

Why is Economic Growth Important? .......................... 6

Determinants of economic growth ............................ 6

1. Lack of Necessary Infrastructure ...................... 6

2. Political Instability ................................. 6

3. Institutional Framework ............................... 7

4. Poor Health & Low Levels of Education ................. 7

Unemployment and Ways to tackle it........................... 7

1. Re-skill for digital interventions .................... 7

2. Seek opportunities in automation ...................... 8

3. Upgrade and Upscale ................................... 8

4. Leverage opportunities offered by start-ups ........... 8

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 What is Economics?
Economics is a social science concerned with the production,
distribution, and consumption of goods and services. It
studies how individuals, businesses, governments, and nations
make choices about how to allocate resources. Economics
focuses on the actions of human beings, based on assumptions
that humans act with rational behavior, seeking the most
optimal level of benefit or utility.

It is the study of scarcity and its implications for the use

of resources, production of goods and services, growth of
production and welfare over time, and a great variety of other
complex issues of vital concern to society.

Three Basic Economic Problems

All modern economies have certain fundamental or basic
economic problems to deal with. In every single economy,
including the so-called “affluent society”, resources are
limited. As a result, decisions regarding the resource use
have to be made together by individuals, by business
corporations, and by society.

Following are the 3 fundamental economic problems faced by all

societies worldwide.

1. What to produce?
Each and every economy must determine what products and
services, and what volume of each, to produce. In some way,
these kinds of decisions should be coordinated in every
society. In a few, the govt decides. In others, consumers and
producers decisions act together to find out what the
society’s scarce resources will be utilized for.

2. How to produce?
This basic economic problem is with regards to the mix of
resources to use to create each good and service. These types

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of decisions are generally made by companies which attempt to
create their products at lowest cost. The initial approach to
production, using a resource combination which includes a
small capital and much labour, is labour-intensive while the
second, utilizing a little labour and a lot of capital, is
capital-intensive. Each one of these ‘how’ decisions was made
based on lowest cost and accessible modern technology.

3. For whom to produce?

This basic economic question is focused on who receives what
share of the products and services which the economy produces.
The portion of production which each person and family can
consume is determined by their income. Income is distributed
in line with the value of resources we have to sell. The for
whom decision can even be dependent upon skills shortages, in
which case organizations will provide higher incomes to
attract workers with rare skills. In the same way, high wages
may be required to attract employees to rural locations.

Economic Growth and Determinants

Introduction
The topic of economic growth has been extensively studied
through data from developed, emerging and developing
economies, since growth is a natural process that signals
evolution. Moreover, achieving a stable level of economic
growth is a desideratum that should be listed on the priority
agendas of governments around the world. At the end of the
day, growing economies generally register higher per capita
income, numerous job opportunities due to increased
competition among economic agents, higher levels of foreign
direct investment, an overall improvement of living standards
and citizens’ wellbeing, among other benefits. Nevertheless,
when the question of sustainability is also considered,

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achieving and maintaining economic growth becomes challenging.
From a theoretical standpoint, economic growth can be defined
as a rise in the quantity and quality of goods and services
produced and consumed within an economy over a period of time.
Therefore, it is generally mirrored by an increase in the
national gross domestic product (GDP).

There are four main production factors: land, labor, capital

and technological progress (more recently added). Economic
literature reports various theories and growth models that
take into account different combinations of production factors
(Keita 2018). For instance, based on the neoclassical growth
theory, the Solow-Swan model states that growth depends on
creating an efficient relationship between labor and capital,
with technology playing a fundamental role in achieving this
efficiency. In this sense, short-term economic growth is
impacted by the population growth rate and the labor force but
not by savings, while long-term economic growth is
substantially shaped by technology. According to the
endogenous growth theory, economic growth is driven mostly by
internal factors rather than external ones. In this regard,
government policies should support market competition, while
private sector investment can boost technological progress.
Moreover, based on the Keynesian economic growth theory, the
Harrod-Domar model stipulates that economic growth depends on
savings and capital.

Within modern economies, any rise in the quantity and quality

of goods and services that are produced and consumed is
usually facilitated by an increase in the quantity and quality
of production factors, entrepreneurial spirit, substantial
investment, governmental support granted to business
endeavors, political stability and rule of law, social
cohesion, etc. Therefore, the phenomenon of economic growth
falls under the influence of many factors.

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Why is Economic Growth Important?
Economic growth is one of the most important indicators of a
healthy economy. One of the biggest impacts of long-term
growth of a country is that it has a positive impact on
national income and the level of employment, which increases
the standard of living. As the country’s GDP is increasing, it
is more productive which leads to more people being employed.
This increases the wealth of the country and its population.
Higher economic growth also leads to extra tax income for
government spending, which the government can use to develop
the economy. This expansion can also be used to reduce the
budget deficit.

Additionally, as the population of a country grows, it

requires growth to keep up its standard of living and wealth.

Economic growth also helps improve the standards of living

and reduce poverty, but these improvements cannot occur
without economic development. Economic growth alone cannot
eliminate poverty on its own.

Determinants of economic growth

1. Lack of Necessary Infrastructure: Developing nations often

suffer from inadequate infrastructures such as roads, schools,
and hospitals. This lack of infrastructure makes
transportation more expensive and slows the overall efficiency
of the country.

2. Political Instability: Similarly, political instability in

the government scares investors and hinders investment. For
example, historically, Zimbabwe had been plagued with
political uncertainty and laws favoring indigenous ownership.
This instability has scared off many investors who prefer
smaller but surer returns elsewhere.

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3. Institutional Framework: Often local laws don’t adequately
protect rights. Lack of an institutional framework can
severely impact progress and investment.

4. Poor Health & Low Levels of Education: People who don’t

have access to healthcare or education have lower levels of
productivity. This lack of access means the labor force is not
as productive as it could be. Therefore, the economy does not
reach the productivity it could otherwise.

Unemployment and Ways to tackle it

Unemployment is a term referring to individuals who are

employable and actively seeking a job but are unable to find a
job. Included in this group are those people in the workforce
who are working but do not have an appropriate job. Usually
measured by the unemployment rate, which is dividing the
number of unemployed people by the total number of people in
the workforce, unemployment serves as one of the indicators of
a country’s economic status.

Unemployment can be solved if planned properly by the nation

from the start. There are a number of ways by which the
natural rate of unemployment can be solved.

Some possible ways by which the government and the people can
work together to solve long term unemployment are:

1. Re-skill for digital interventions: The first and foremost

step towards effectively combating the rising unemployment
would be to acknowledge the impact of artificial intelligence
(AI) and automation on job growth. We are in the midst of a
digital revolution and coming out on the other side of it in a

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prosperous manner would require re-skilling nearly hundreds of
millions workers.

2. Seek opportunities in automation: For over two decades,

industry growth directly resulted in creation of new jobs.
However, technological changes and advent of automation has
nearly reversed that trend. The effects of digital
transformation are not limited to the IT sector alone. Almost
every sector, be it finance, healthcare, manufacturing or
public, can be seen undergoing a paradigm shift to embrace the
trends of industry 4.0.

Empowering the existing and upcoming work force with tools

such as data analytics, cloud computing, Internet of Things
and more can unravel a gold mine of opportunities.

3. Upgrade and Upscale: Today, there is a sea change in

technologies and workings of the IT industry. Old skills are
fast becoming obsolete and a new crop of professionals is
being called upon to strengthen the workforce.

This calls for a desperate need to revamp the fresh talent

chain. For this, higher education institutions will have to go
back to the drawing board and overhaul their curriculum, and
companies need to encourage a culture of self-learning.

4. Leverage opportunities offered by start-ups: Changing

mindsets about what constitute lucrative job opportunities can
also play a decisive role in streamlining employment avenues.

It is important to acknowledge that the key to employment

growth no longer lies with big corporations with thousands of
employees but medium and small scale units.

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