8/14/2019 Economic and Social Environment Solved Assignment
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Economic and Social Environment Solved Assignment Q6
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Assignments 2009
Q6. Write short notes on
) Economic Environment
) Public Accountability
) Industrial Policy of 1956
a) Economic Environment:
Economics is the social science that studies the production,
distribution, and consumption of goods and services. Current
conomic models developed out of the broader field of political
economy in the late 19th century, owing to a desire to use
mpirical approach more akin to the physical sciences.
A definition that captures much of modern economics is that of
Lionel Robbins in a 1932 essay: the science which studies
uman behaviour as a relationship between ends and scarce means
which have alternative uses. Scarcity means that
vailable resources are insufficient to satisfy all wants and
needs. Absent scarcity and alternative uses of available
resourc
here is no economic problem. The subject thus defined involves
the study of choices as they are affected by incentives an
esources.
Economics aims to explain how economies work and how economic
agents interact. Economic analysis is applied throughoociety, in
business, finance and government, but also in crime, education, the
family, health, law, politics, religion, social
nstitutions, war, and science. The expanding domain of economics
in the social sciences has been described as economic
mperialism.
Common distinctions are drawn between various dimensions of
economics: between positive economics (describing what
nd normative economics (advocating what ought to be) or between
economic theory and applied economics or between
mainstream economics (more orthodox dealing with the
rationality-individualism-equilibrium nexus) and heterodox
conomics (more radical dealing with the
institutions-history-social structure nexus). However the primary
textbook
istinction is between microeconomics (small economics), which
examines the economic behavior of agents (including
ndividuals and firms) and macroeconomics (big economics),
addressing issues of unemployment, inflation, monetary an
scal policy for an entire economy.
The economic environment comprises of:
* Income and wealth: Income in an economy is measured by GDP,
GNP and per capita income. High values of these fac
how a progressiveeconomic environment.
* Employment levels: High employment represents a positive
picture of the economy. However, there are many forms o
nemployment, including partial employment and disguised
unemployment.
* Productivity: This is the output generated from a given amount
of inputs. High levels of productivity support the econo
nvironment.
The economic environment can be classified into:
* Microeconomic environment: It includes the economic
environment of a particular industry, firm or household and is
rimarily concerned with price determination of individual
factors. The main consideration from a microeconomic perspecti
s the efficient allocation of resources. This is necessary to
maximize total output.
* Macroeconomic environment: It includes all the economic
factors in totality. The main consideration here is the
etermination of the levels of income and employment in the
economy.
Over the course of the twentieth century, the focus has shifted
from cities and countries to the global economy being the c
conomic unit.
b) Public Accountability:
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Accountability is a concept in ethics with several meanings. It
is often used synonymously with such concepts as
esponsibility, answerability, enforcement, blameworthiness,
liability, and other terms associated with the expectation of
ccount-giving. As an aspect of governance, it has been central
to discussions related to problems in both the public and
rivate (corporation) worlds.
Accountability is defined as A is accountable to B when A is
obliged to inform B about As (past or future) actions and
ecisions, to justify them, and to suffer punishment in the case
of eventual misconduct.
n leadership roles, accountability is the acknowledgment and
assumption of responsibility for actions, products, decisions
nd policies including the administration, governance, and
implementation within the scope of the role or employment pos
nd encompassing the obligation to report, explain and be
answerable for resulting consequences.
With the increase over the last several decades in public
service provision by private entities, especially in Britain and
the
United States, some have called for increased political
accountability mechanisms to be applied to otherwise
non-political
ntities. Legal scholar Anne Davies, for instance, argues that
the line between public institutions and private entities like
orporations is becoming blurred in certain areas of public
service provision in the United Kingdom and that this can
ompromise political accountability in those areas. She and
others argue that some administrative law reforms are necess
o address this accountability gap.
With respect to the public/private overlap in the United States,
public concern over the contracting out of government
including military) services and the resulting accountability
gap has been highlighted recently following the shooting incid
nvolving the Blackwater security firm in Iraq.
) Industrial Policy of 1956:
The Industrial Policy Resolution 1956 was shaped by the
Mahalanobis Model of growth, which suggested that emphasis o
eavy industries would lead the economy towards a long term
higher growth path. The Resolution widened the scope of th
ublic sector. The objective was to accelerate economic growth
and boost the process of industrialization as a means to
chieving a socialistic pattern of society. Given the scarce
capital and inadequate entrepreneurial base, the Resolution
ccorded a predominant role to the State to assume direct
responsibility for industrial development. All
ndustries of basic and strategic importance and those in the
nature of public utility services besides those requiring large
cale investment were reserved for the public sector.
The Industrial Policy Resolution 1956 classified industries into
three categories. The first category comprised 17 industrie
included in Schedule A of the Resolution) exclusively under the
domain of the Government. These included inter alia,
ailways, air transport, arms and ammunition, iron and steel and
atomic energy. The second category comprised 12 indust
included in Schedule B of the Resolution), which were envisaged
to be progressively State owned but private sector was
xpected to supplement the efforts of the State.
The third category contained all the remaining industries and it
was expected that private sector would initiate developme
hese industries but they would remain open for the State as
well. It was envisaged that the State would
acilitate and encourage development of these industries in the
private sector, in accordance with the programmes formula
nder the Five Year Plans, by appropriate fiscal measures and
ensuring adequate infrastructure. Despite the
emarcation of industries into separate categories, the
Resolution was flexible enough to allow the required adjustments
a
modifications in the national interest.
Another objective spelt out in the Industrial Policy Resolution
1956 was the removal of regional disparities through
evelopment of regions with low industrial base. Accordingly,
adequate infrastructure for industrial development of such
egions was duly emphasized. Given the potential to provide
large-scale employment, the Resolution reiterated theGovernments
determination to provide all sorts of assistance to small and
cottage industries for wider dispersal of the
ndustrial base and more equitable distribution of income. The
Resolution, in fact, reflected the prevalent value system of
ndia in the early 1950s, which was centered around self
sufficiency in industrial production. The Industrial Policy
Resolutio
956 was a landmark policy statement and it formed the basis of
subsequent policy announcements.
