Study Economics in the 21st Century

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To answer the question what the reasons for studying economics in the 21st century are it is necessary to define the term economics. Economics is the science of economic activities in material and non-material spheres of production, which also comprises the economic relations regarding production, distribution, exchange, and consumption. It is designed to meet unlimited human needs with limited resources. This science has its own methodology, tools, and evidence of axiomatic bases. At the same time, economics is part of daily life constantly surrounding people in society. It is designed to meet the daily needs of a person.

Economics Essay Example

The first reason for studying economics is that it deals with issues that directly affect people. In the course of life, there is a strong need to answer many questions and solve many problems. One of the most difficult and vivid ones is how to pay the bills after all taxes and fees (Mankiw, 2011). The problem of inflation in the country and the ways it can impact the buying power are also important. One must know what types of repairs need to take place in the house and how to choose the job that pays enough. Furthermore, there are problems that are not only the matter of family and personal plans.

The country, in which people live, is characterized by its political, and at the same time, economic activities, the consequences of which affect everyone regardless of social status and position but vary in degrees. For example, there are problematic questions related to the decision in what way the country should pay off its foreign debt: by raising taxes or by raising the levels of industry development (Mankiw, 2011). Whether it is good or bad decision to raise the retirement age for women and men, along with an increase in the required length of service, or whether effective implementation of shadow wages removal policy should go together with the process of creation of more jobs.

Economy also helps to answer the questions in the field of business and finance. It helps to find right answers to problematic questions such as usage of advanced technology in production; it also helps to deal with it if the number of jobs and wages decreases but the quantity and quality of domestic products for export increases. Which party to vote and what benefits this will bring in the future are also questions that economics can help to find an answer to. Economics study the dependencies of the market and why some stocks are rising in price while others are falling. Economy helps to answer the questions of a global or national character.

Globalization of the economic activity has led to the fact that the mechanism of the world economy exerts an increasingly growing impact upon issues of the international community. These problems are called global, and the academic community has introduced the term “globalism” as a specific area of international economic research. Judging by many signs in the 21st century, the world has entered a period of significant complications in the economy. This primarily refers to the group of developed countries that were marked by significant economic downturn and high-tech process that produced the mode of the new economy (Mankiw, 2011). This development has a significant influence upon the manufacturing industry, and now it is called traditional. Most researchers agree that despite the diversity of global issues they have common characteristics. Indeed, the specificity of global problems is that they have some common characteristics.

First is that they are global in nature, which means they affect interests and the fate of all mankind. Moreover, they threaten the humanity as a serious setback to the living conditions and further development of the productive forces. Some of them need urgent and immediate resolution; they are interrelated and require joint efforts of the whole world community for in order to be solved. The causes of global problems are results of qualitative changes in development of productive forces in the economy, politics, culture, and other spheres of the human activity. Moreover, they cannot be explained in terms of a single science.

Economics is the science that helps investigate and find the answer about the most important reason that leads humanity to the global conflicts. This is primarily the accumulation of enormous capacity which puts pressure on the nature and contributes to the depletion of its resources. Since the beginning of the century the population of Earth has increased and tripled, while the amount of economic activity increased twenty-fold. The transition to post-industrialism has changed the target set of the social production (Mankiw, 2012). Chasing the maximum profits, the process of intensive development of production is accompanied by a structural crisis, uneven development, and the conflicts’ growth. This has contributed to a jump in the military sphere.

A special place in the aggravation of global problems is technical progress. The magnitude of its impact upon the environment is unique. The environment is not only saturated with waste products, but new substances of production activities emerged which cannot be decomposed by natural processes. The problem of environmental pollution and waste disposal acquired planetary character, and economics is seen as the science that connects the ties between these processes. The scientific and technological progress has contributed to the emergence of other issues affecting the interests of civilization.

Space and the oceans, and other global problems are a special set of social and economic processes and phenomena in the world. Although they are different in scale and character, the important values represent the vital interests of people of all countries, irrespective of their social systems, levels of economic development, and geographic location. Studying economics in 21st century is inevitable, because there are a lot of problems that need to be solved. Major global problems of the world economy include the problem of poverty and backwardness. This question touches the level of poverty and backwardness, particularly in relation to developing countries where almost two thirds of the world population lives (Mankiw, 2012). Therefore, this global problem is often called the problem of overcoming the backwardness of the developing countries.

There are more hungry people on the planet now than it has ever been in the human history. According to the forecast of the UN Conference on Trade and Development, the rate of economic attitude between developed countries and those of lower level of development is about 1 to 60. This means that each developed country accounts for about 60 underdeveloped countries. For most of these countries, especially the least developed, a strong retardation is typical, as measured in terms of their socio-economic development. As a result, many of these countries are characterized by appalling poverty.

The scientists of different countries agree on the point that global economics has a strong impact upon all aspects of human life and one of the most important aspects touches the problem of the global environmental crisis growth. According to the level of general condition, the entire environmental degradation system of the world can be divided into two parts: the degradation of the environment through poor environmental management, and pollution with human waste. The degradation of the environment as a result of mismanagement of natural resources can result in deforestation and the depletion of land resources.

Deforestation is expressed by the process of constant reduction of the area under natural vegetation, especially forest. By historical estimates, earlier the territory of the planet was covered with forests for 62 million kilometers of land; bushes and woods covered 75 million miles, or 56% of its surface. 10 thousand years of deforestation of the area reduced forest areas to 40 million kilometers; so and the average forest coverage has now reached up to 30%. Land degradation due to expansion of agriculture and cattle breeding has often occurred during the history of mankind.

Scientists estimate that as a result of poor land management the humanity has already lost two billion hectares of once productive land, which is significantly more than the entire current area of usable land. Nowadays, as a result of degradation of soil, annually global agriculture loses about 7 million hectares of land that loses its fertility and becomes uninhabitable. Soil loss can be assessed not only in space but also in weight. U.S. researchers estimate that only arable land of the world annually loses 24 billion tons of fertile soil layers, which is equivalent to the destruction of all wheat fields in the south-east Australia (Mankiw, 2012). The worst that affects the soil water and wind erosion is chemicals (clogging with heavy metals, chemicals) and physical degradation (destruction of the soil cover by mining, construction and other works) .

Environmental problems are not the unique sphere of economics’ study and influence. Demographic problem of the world population throughout the history of mankind has been steadily increasing. For many centuries, it has grown very slowly. In the 20th century population growth rate has accelerated dramatically. The world’s population reached its first billion about 1820, its second billion it reached in 107 years in 1927, the third one took place 32 years later in 1959, the fourth since 15 years in 1974. The fifth billion took place after only 13 years in 1987 and the sixth 12 years later in 1999 (Mankiw, 2012).

According to the latest research, the global population has reached the figure of 6.5 billion of average annual growth rate and is gradually slowing down. This is due to the fact that the countries in North America, Europe and Japan have moved to a simple reproduction of the population, which is characterized by low growth and relatively low natural population decline. At the same time, the natural population growth in China and South East Asia significantly decrease. However, the slowdown means little to the global demographic situation in the first decades of the 21st century and economic problems related to it.

As it was mentioned earlier, the slowdown is still not enough to significantly reduce the absolute increase. Especially severe global demographic problem stems from the fact that over 80% of the world’s population growth is occurring in developed countries. The regions with the greatest level of population growth are now represented by countries of tropical Africa, the Middle East, and South Asia. The population growth explosion in the developing countries began in the 1950s and 60s. According to some scientists, it will continue at least until the end of the first quarter of the 21st century.

The main reason is that at present in the developing countries there is a transitional type of reproduction in which the mortality reduction is not accompanied by a corresponding reduction in the birth rate. Average mortality level falls for the developed countries. This happened to a great extent as a result of active measures to combat epidemics through the use of innovative medicines which improved general health conditions of the population. At the same time, the birth rate in the developing countries is still high. The main consequence of the rapid population growth in developing countries is that it was followed by economic growth and social changes.

The acceleration in population growth caused huge economic effect and led to the modernization of production processes and better results of the social sphere development. The population explosion has led to the increasing concentration of the world labor force in developing countries, where the labor force has grown by five to six times faster than in industrialized countries. In this case, two thirds of the world labor force resources became concentrated in countries with the lowest level of socioeconomic development.

In this context, one of the most important aspects of the global demographic problem in modern conditions is the creation of employment and the effective use of human resources in developing countries. Employment issues can possibly be resolved by the creation of new jobs in the modern sector of the economy, and by the increase of migration processes to the industrialized and richer countries. Backwardness is one of the reasons for the high rate of natural population increase. All this suggests that as the level of economic development in the developing world moves on to the modern type of reproduction, this will make a significant contribution to the demographic problem. The main demographic indicators are births, deaths, whose natural increase or decrease depends on the level of economic, social, and cultural development.

The findings and recommendations of the commission received a positive assessment by the General Assembly. Among the most important documents of the Conference on Environment and Development is the “Agenda for the XXI Century”, which is a global program of economic and social development of mankind in the next century. All developed countries of the world have expressed their desire to follow the direction of sustainable development. They agreed to apply all conceptual official government and international instruments as the basic ideology of using the concept of sustainable development (Mankiw, 2012).

The central problem of sustainable development is the problem of taking into account long-term environmental consequences of economic decisions. There are four criteria for sustainable development. In the long run, this approach is based on the classification of natural resources and the dynamics of their reproduction. It refers to renewable natural resources including land and forest. The decisions considering the use of oil, gas, coal, and alternative energy sources like solar, wind, geothermal, tidal and tides, biomass, and other resources. The productive decisions regarding waste should take place by introducing waste-free, little of waste and energy saving technologies. There should be developed strategies that will make it possible to minimize pollution to the socially and economically acceptable level.

By way of conclusion, economics touches the life of people in all spheres of their activities and by way of finding the most reasonable solutions to the global problems there is a strong need in human resources that can solve the economic issues. The world is characterized by the process of globalization and economic development; that is why it is so important to study economics in 21st century (Dolan, 2010). Summarizing the divergent points of view on this issue, it is possible to group economic problems that need solving into two basic approaches.

The first approach is a strategy of total cleaning which links sustainable economic development of the mankind with clean energy, waste-free technologies, and closed production cycle. This approach is based on the fact that changes in the environment and the degradation of ecosystems are caused by inappropriate farming and can be eliminated by its restructuring, which will not inhibit the environment. However, the creation of a closed technological cycle is either impossible or too expensive. The right solution can be found by thorough economic investigation of this issue, which makes it another reason to study economics.

The second approach is a strategy of limited use. It is based on the fact that humanity consumes too many natural resources, and this causes its depletion and degradation of the environment. Both approaches are based on the fact that the main source of environmental problems is the extremely high level of consumption of natural wealth. They recognize the necessity of finding the right and economically reasonable solution.

The issue of development and evolution of the human potential of any economy and the world economy as a whole, especially in the 21st century, is defined by its human potential. The main problems that are tied to economics include unemployment, inflation, economic growth, taxation, poverty, international trade, health, pollution, discrimination, immigration, government regulation of the industry, and education (Dolan, 2010).

The economy is the service of civil society. If people want to be well-informed citizens, they must know the fundamentals of the economy. Most current political problems have significant economic aspects, their solution enhances the importance of a balanced federal budget. ensuring of the financial security of Social Security retirees and the problems of large trade deficit are tightly connected to the topic of the economy. The questions on what the best ways of reducing pollution are and what must be done to reduce or at least keep inflation under control are inherently economic problems (Mankiw, 2011). Economics finds solutions to such problems which are ways to stimulate productivity and economic growth. It finds the answer to the question whether existing social security system are effective and reasonable. Economics helps to decide whether there is a strong need to reform the tax system and what the best way to respond to the market dominance of several firms in some sectors of the economy associated with technology is. All these facts prove one thing – the study of the subject and object of the economy is very important. Knowledge of economics largely determines the level and quality of people’s. There have always been real people in the center of economic processes, like owners, producers, and intermediaries. The word economy has meanings, but its essence remains the same, changing only the scope of the concept.

Development of economical knowledge remains a major incentive for the development of science, technology, and industry, thereby contributing to the flourishing of culture and education, and raising of the living standards. Science and technology have reached a high level of development, but it is not enough to meet all the needs of humanity (Mankiw, 2011). There is much importance in studying the modern economy, knowledge of which will help to improve significantly the life conditions of people in the future. As any science, economics has its own laws, principles, and rules that it develops. It examines all aspects of human life, reflects all the processes that take place in society starting from political and reaching the household. So studying economics involves application of all subjects that are taught at school, college, or university.


Economy is most closely associated with science, mathematics, law, sociology, geography, history, political science, and psychology. Geographical knowledge allows elucidating the role of natural conditions and raw materials of different areas in the distribution of goods and services. The study of history can help identify patterns of formation and development of the economy and understand the state of the world economy (Mankiw, 2011). Knowledge of political science explains and defines the role of the state and individual social groups in the functioning of the economy. It is impossible to investigate the issues that regulate social relationships both within the country and at the international level without economics or knowledge of legislation, so the connection with the jurisprudence and economics is very close.

Knowledge of psychology makes it possible to identify the characteristics of human behavior in different situations, and to find out the motives forcing one to act one particular way or another. The economy widely uses formulas, equations, graphs, and illustrations for the analysis of various processes and phenomena, so it is closely related to mathematics and its branches. One of the benefits of studying economics is a chance of deeper understanding of the economic situation and see people as the main factor that influences the global economy.