Function

• Economic development often refers to a broad class of activities designed to enhance the economic prosperity of communities, regions and nations. The field of development economics concentrates on the low- and middle-income nations of the world, studying the processes by which predominantly rural, agricultural economies into modern industrial ones. Planning requires assessing the economic development objectives of a community or nation against its available resources, such as available land and the skills and education of the area's work force.
  
  

Significance

• Although economic development is significant for all regions and nations, it is especially important for the world's developing countries, defined by the World Bank as the low- and middle-income nations. According to Debraj Ray, a development economist at New York University, writes that these nations contain the majority of the world's population, but have a total national income that is about one-fourth of that generated by the world's wealthiest nations, such as the United States, Germany, Japan, Great Britain and Canada.
  
  

Benefits

• The economics of development and planning enables planners to identify activities and initiatives that are likely to foster successful development activities that lead to greater levels of economic activity and employment for the region in question. Through planning activities, development authorities may identify a need for greater technology, infrastructure improvements, or human capital investments, such as improved education.
  
  

Considerations

• Writing in the "International Research Journal of Finance and Economics" in 2007, economists Syrous Kooros and Laura Badeaux assert that planning has a pivotal role in economic development because markets, left to their own devices, cannot provide a coordinated development plan. Therefore, communities and nations must map out a strategy for improving their economic well-being. Economic development planning usually entails government involvement. Many cities and towns in the U.S., for example, have economic development entities. As a result, development and planning have a political dimension, as well as an economic one.
  
  

Types

• Kooros and Badeaux identified three complementary approaches to economic development planning. The first approach forecasts the effects of changes in consumer behavior on specific markets or on overall economic performance. The second approach estimates how growth in one industry will affect the entire economy of a region or nation. The third type tries to predict resource needs and determine how to allocate these resources among various economic sectors to achieve maximum development.