Adam Smith is known as father of economics. We get his ideas about economic development from his well-known book, “An Enquiry into the Nature and Causes of Wealth of Nations” (1976) which has tremendously influenced the thinking about economic growth and development.
We briefly explain below his ideas about economic development. We will study below that he advocated the policy of laissez faire, that is, non-intervention of government in economic activities of the individuals. He laid stress on individual freedom in conducting their economic affairs without any obstructions and restrictions by the Government. He advocated free trade among nations of the world and urged that all restrictions on foreign trade should be removed to promote international specialization so as to increase the incomes of the nations.
Aspects of Adam Smith’s Theory:
The crucial aspects of development theory as propounded by Adam Smith are – (1) division of labour and (2) capital accumulation. Productivity of labors increases through division of labour. The two factors that facilitate the use of more division of labour are capital accumulation and size of market. We explain below these factors in detail. Also learn about the relevance of Adam Smith’s Theory to developing countries.
Explanation:
Adam Smith is known as father of economics. We get his ideas about economic development from his well-known book, “An Enquiry into the Nature and Causes of Wealth of Nations” (1976) which has tremendously influenced the thinking about economic growth and development.
We briefly explain below his ideas about economic development. We will study below that he advocated the policy of laissez faire, that is, non-intervention of government in economic activities of the individuals. He laid stress on individual freedom in conducting their economic affairs without any obstructions and restrictions by the Government. He advocated free trade among nations of the world and urged that all restrictions on foreign trade should be removed to promote international specialization so as to increase the incomes of the nations.
Aspects of Adam Smith’s Theory:
The crucial aspects of development theory as propounded by Adam Smith are – (1) division of labour and (2) capital accumulation. Productivity of labors increases through division of labour. The two factors that facilitate the use of more division of labour are capital accumulation and size of market. We explain below these factors in detail. Also learn about the relevance of Adam Smith’s Theory to developing countries.
