Page 241 - Encyclopedia of Business and Finance

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Economic Cycle

resources and achieve objectives in the most efficient and attention of government, the business sector, and the citi-
cost effective manner. zenry. Economic development is pursued as one of the
goals of a successful country, state, or city. It captures the
SEE ALSO Economics
attention of the news media and impacts, as well as is
impacted by, political objectives.
BIBLIOGRAPHY
Cross, Wilbur (1999). Dictionary of Business Terms. Englewood
Cliffs, NJ: Prentice Hall. MEASUREMENT OF ECONOMIC
DEVELOPMENT
“Economic Statistics Briefing Room.” Retrieved October 18,
2005, from http://www.whitehouse.gov/fsbr/esbr.html. Economic development in a community can take many
“FEDSTATS.” Retrieved October 18, 2005, from forms. However, before discussing the process of eco-
http://www.fedstats.gov. nomic development, we must first understand how eco-
Geahigan, Priscilla Cheng, ed. (1994). American Business Climate nomic development has been measured, particularly at the
and Economic Profiles. Detroit, MI: Gale Research. national level. It is within this framework that communi-
Maddison, Angus (1995). Explaining the Economic Performance ties have pursued their goal of improving the local eco-
of Nations: Essays in Time and Space. Brookfield, VT: Edward nomic environment. In fact, standardized measures of
Elgar Publishing. economic development are being used throughout the
“Office of Economic Analysis”. Retrieved October 18, 2005, world, not just in the United States.
from http://www.sec.gov/about/economic.shtml.
Standardized measures of economic development are
Schumpeter, Joseph A. (1994). History of Economic Analysis. New used to identify the status of one’s country, state, or local
York: Oxford University Press.
community. We use these measures for a number of dif-
STAT-USA/Internet. Retrieved October 18, 2005, from
ferent purposes, including identifying trends and under-
http://www.stat-usa.gov.
standing patterns of economic development in
Trueman, Richard E. (1981). Quantitative Methods for Decision
Making in Business. Chicago: Dryden Press. communities that face different resource opportunities
and constraints.
Tummola, V.M. Rao (1973). Decision Analysis with Business
Applications. New York: Intext Educational Publishers. One of the most common methods of measuring eco-
nomic growth is by calculating the gross national product
of a country. Gross national product (GNP) is the value of
Ralph D. Wray
goods and services produced by an economy’s factors in a
given period of time (e.g., the value of all goods and serv-
ices produced by U.S. operations throughout the world in
a given year). Gross domestic product (GDP), on the
ECONOMIC CYCLE other hand, is the value of goods and services produced in
SEE Business Cycle an economy in a given period of time (e.g., the value of
goods and services produced in the United States in a
given year). When these measures are adjusted for infla-
tion, we correct for any changes in the GNP or GDP that
ECONOMIC are due simply to increases in the price level in the econ-
DEVELOPMENT omy. Real GDP, for example, is the value of goods and
services produced in an economy adjusted for changes in
Economic development, generally speaking, is a process of
the price level. This is particularly important when com-
change that is focused on the betterment of the commu-
nity, state, and/or nation. Defining economic develop- paring across different economies because changes in price
ment can be difficult. The first term in this levels will not necessarily be uniform from one country to
the next.
phrase—economic—refers to an accepted paradigm for
organizing the business and financial and even to some The general purpose of using measures such as real
extent the governmental sectors of a nation. Economics is GNP or real GDP is to collect and analyze information
viewed as the foundation for building a prosperous soci- related to a country’s economic transactions. Real GNP or
ety. However, it is the second term—development—over real GDP provides analysts with an indication of how
which there is considerable debate. People’s perceptions of quickly the business sector of the economy is growing in a
development vary. For some, development has the appear- country. It also serves as a guidepost for local communities
ance of successful commercial enterprise; for others, the as they address economic development issues at a local level.
face of development is one of economic equality. Never- Trends in national economic development reflect
theless, the concept of economic development has the changes occurring at the state and local levels and can

218 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION