Economics and development economics
Economics and development economics study how societies produce, distribute and consume resources and how living standards change. They estimate the costs of shocks and the trade-offs among policy responses. Economic Development stewards this page for the Nexus Consortium.
- 01In briefThe short answer
- 02The methodWhat economics and development economics covers
- 03Reference practiceEconomic measurement rests on national accounts and shared data
- 04In systemic risk workIndirect losses often exceed direct ones
- 05Applied inPlatforms that apply this method
- 06StewardshipWho maintains this page
- 07Key termsTerms used on this page
GCRI · Institution · service level R0
The short answer.
Economics and development economics study how societies produce, distribute and consume resources and how living standards change. Economic analysis quantifies indirect losses as shocks spread through supply chains and labour markets. In the Nexus Consortium, Economic Development stewards its canonical page, and 6 other platforms apply it, including Future of Work and Skills as well as Capital Nexus.
Systemic exposure in North America.
Where people and networks concentrate, the exposure through which shocks travel between systems, shown for North America as an example geography for this subject.
What economics and development economics covers.
- 01
Core methods
input-output analysis; computable general equilibrium modelling; cost-benefit analysis; household welfare analysis; growth accounting; field experiments.
- 02
Data and instruments
national accounts; household income and expenditure surveys; trade statistics; labour force surveys; price indices.
- 03
Validation
Models are assessed against historical episodes and out-of-sample data. Parameter estimates are compared across studies and identification strategies.
- 04
Limits
Equilibrium models may understate disruption and nonlinear cascades. Informal economies and non-market losses are poorly measured.
- 05
Use in risk decisions
Economic analysis quantifies indirect losses as shocks spread through supply chains and labour markets. It supports prioritising investment in prevention and recovery.
Economic measurement rests on national accounts and shared data.
| Reference | What it sets |
|---|---|
| System of National Accounts | Definitions of output, income, capital and their measurement |
| World Bank and IMF data | Macroeconomic and development indicators |
| Input-output tables (for example OECD inter-country tables) | Inter-industry linkages for shock propagation |
Indirect losses often exceed direct ones.
Damage to assets is the direct loss; lost production in supplier and customer industries, and in households, is the indirect loss. Input-output and computable general equilibrium models estimate indirect losses, and their assumptions about substitution and recovery time largely decide the answer.
- Do not add damage to capital and lost output without checking for double counting.
- State substitution elasticities and recovery assumptions.
- Distinguish distributional effects from aggregate ones.
- Applications on Economic Development and Future of Work and Skills.
Platforms that apply this method.
Who maintains this page.
Economic Development stewards economics and development economics: it keeps this description current and reviews how the method is applied across the platforms.
Terms used on this page.
Each term as this page uses it. Where a standard-setting body defines the term, the wording follows that body.
| Term | Definition |
|---|---|
| Economic rate of return | The discount rate at which a project's economic benefits equal its costs. |
| Shadow price | An adjusted price reflecting a resource's true value to the economy rather than its market price. |
| Incidence | Who ultimately bears the cost or receives the benefit of a tariff, tax or subsidy. |
| Permanent income rule | A rule that spends only the sustainable return on total resource wealth, keeping it for future generations. |
Where this page's references lead.
The bodies and documents this page is read against. Status and editions change; each link goes to the issuing body.
Where this page leads across the Consortium.
- Development economicsGCRIApplied in Economic Development.
- Labour economicsGCRIApplied in Future of Work and Skills.
- Economics for public capital decisionsGRFApplied in Capital Nexus.
- Economics for development financeGRAApplied in Development Finance Nexus.
- Economics of public wealthGRAApplied in Sovereign Capital Nexus.
- Economics and development economics for disaster risk financeGRAApplied in Disaster Risk Finance.
- Economics and development economics for public finance and sovereign debtGRAApplied in Public Finance and Sovereign Debt.
Questions and answers.
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How do I suggest a correction to a method page?
Around GCRI.
Start with an enquiry.
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