Applied economics refers to the use of economic models, theories and data to solve real problems. Specialists in this area have the skills to analyze and predict economic trends in the areas of international trade, urban and labor economic activity, fiscal and budgetary policy. Getting a speci alty in this area opens the door to life wide. You can work in private financial institutions, government, research institutes and international organizations.
Introduction
So, applied economics is a set of disciplines about the actions of the real economy. Conventionally, all persons can be divided into 3 large groups: consumers, enterprises and the state. It is for this reason that the foundations of applied economics provide for the division of the scientific discipline into three parts. Each of them is aimed at a certainSubject:
- Housekeeping.
- Applied business economics.
- Economic policy theory.
Analysis of directions
It should be noted that theoretical and applied economics go together. And even the most real knowledge, describing the real work of the enterprise, always has to be read or heard first. So let's start with the basics.
First in importance can be called the applied economics of the enterprise. This direction includes a set of disciplines, thanks to which the actions of the managers of any company are determined. Examples include production planning, personnel management, finance, accounting, and promotion. All this involves focusing on one goal - the company's profit. This area of applied economics is still very often called business theory.
Next in line is home economics. It refers to the organization of consumption and planning of purchases. The theory of economic policy is a system of knowledge that considers the issues of regulation of the state economy. Here, work is being done on money circulation, the capital market, foreign and domestic trade, tax payments, budget distribution, and stimulating the development of individual industries.
Aims pursued
In this case, the primary and secondary ones should be distinguished. The main goal is to provideeconomic growth. Manufacturing should provide more services and better quality products. Getting the maximum possible profit, full employment - these are secondary goals. It is difficult to understand what and how? Let's take employment. This means providing jobs for all those who can and want to work. In addition, there are also tertiary goals:
- Achieve cost-effectiveness.
- Stability of the price level.
- Economic freedom.
- Support trade balance.
- Efficient distribution of income.
What about methods?
Here you need to remember two main words - induction and deduction. That is, the methods of applied economics provide that specialists identify and collect facts that are relevant to the consideration of a particular economic problem. This task is very often classified as descriptive or empirical. Economists have to establish real causes, to generalize about the actual behavior of individuals or institutions. In addition, based on the facts, the principles are revealed by economic theory or analysis.
It should be noted that two-way traffic is possible in research, that is, one can move both from facts to theory, and vice versa. This is where induction and deduction come into play. In the first case, derivation from facts is envisaged through generalization. It should be noted that induction and deduction should not oppose each other. It makes more sense to label them as complementary methods. For example, hypothesesthat are formed by deduction, allow you to navigate during the collection and systematization of empirical data.
We continue to consider methods
Known information about facts and reality allows you to form meaningful hypotheses. When an economist begins to investigate a problem or an economic sector, the factors are first collected, systematized and summarized. Whereas deduction provides for the existence of certain hypotheses, which are subsequently necessarily compared with facts. The data obtained from any method are useful in that they allow us to explain economic behavior and formulate adequate policies. Theory without facts is empty. But if there is no sensible explanation behind certain events and incidents, then this also means that it will not work to use them for your own benefit and foresee future events. Therefore, principles and theories, which in essence are meaningful generalizations based on the analysis of facts, cannot be dispensed with.
Special Features
The fact that theoretical and applied economics are combined together has a number of disadvantages that cause inconvenience. For example, take the fact that principles are generalizations. Although they often contain several clear definitions, they do not escape the fate of being abstractions. But it is precisely through this approach that theories are built that find meaning in a chaotic set of facts. But otherwise, they are simply misleading and do not allow you to derive any benefit. In order not tohappened, the facts should be brought into a rational and usable form. Therefore, generalization/abstraction is indispensable.
About tasks
Development and use of mathematical models is necessary in order to better understand the current reality and focus on it. After all, when problems are solved, they allow you to ignore the details that confuse you. What should be mentioned here? The main task of applied economics is to bring the system and various interpretations to a generalization of facts. In this regard, theories are important. They are the end result of ongoing analysis and bring order and meaning to a set of facts. They bind them together and establish certain connections between them.
It should be noted that the state strives to maintain the situation with a reasonable balance of international trade and financial transactions. Therefore, when working with scaled data, it is necessary to use the concept of correlation. This is a technical term that indicates the relationship of two groups with a systemic character. For example, you may find that when A increases, so does B. But this does not mean at all that there is a direct relationship between them. The association may be accidental or the product of factor B, which was not considered in the analysis. For example, during economic research, it was found that there is a relationship between income and education. So, the more learned a person is, the more he gets. Education is seen as the cause and high income as the effect.
Most of the issues that have to be addressed are applied, that is, those that relate directly to real problems and actions. Specific tasks depend on the direction of the conversation. So, for an enterprise, this may be the calculation of the most profitable supply offers among all that are, when not only the nominal price is taken into account, but also the cost of delivery. Whereas for the state, regulatory tasks are more relevant than specific commercial transactions.
About training
Universities provide a separate speci alty "Applied Economics". Students who decide to master it will be able to study quantitative methods, modeling, analysis and modern information technologies well. All this will be needed in the activity. Graduates can work as experts in foreign economic issues, analysts in the field of research of financial and commodity markets, project managers, head their own enterprise, rationalize production and work in a number of other areas.
Which vocational training program?
It should be noted that there is no single pattern. Although there are general provisions that are being studied, and each educational institution is adding something to them. So, the basis are:
- Mathematical methods of economics.
- Econometrics.
- Applied microeconomic theory.
- Time series analysis.
- Applied macroeconomic theory.
- Probabilities and statistics.
This is how the Applied Economics program looks like in a nutshell. Various subjects can be added in addition, such as the history of economic thought, linear programming, but the essence will not change.
About application
Is it difficult to use the acquired knowledge in a real business? It depends on the quality of learning and teaching, as well as the tasks facing the person. On the one hand, the issues of registering an enterprise with all the nuances, such as registering a company with the tax and statistical services, as well as with the Pension Fund, are not considered. Although it is precisely such bureaucratic moments that can very often confuse a person. Of course, the list of potentially problematic places is an order of magnitude larger, but what about listing them? There is no special discipline that deals with bureaucratic delays. Also rather weak is the study of the issue of the accumulation of primary capital, its use in such a way as to create enterprises, even small ones. For the most part, employees are being trained, who will be able to come to an already established structure and perform a certain list of work. For example, after graduation, a specialist is sent to the economic department, where he gradually grows and moves up the career ladder. If you come to work in a direct profile in the civil service, having a diploma with good grades, then in this case, in a few yearscan legitimately apply for a leadership position.
Conclusion
That's all the information you need to know to get an idea of what applied economics is. Although you can still say a word about certain moments. For example, many do not understand the difference between fundamental and applied economics. The fact is that the first deals with the study of general provisions, while the second deals with particular cases. From the fundamental provisions, new provisions are developed, which are then already implemented in practice. Although it could be the other way around. Something has arisen in practice, and then this phenomenon is studied in detail in order to determine all the important points. Each of the constituent sciences is important, and they both complement and expand each other. Also, don't forget that there is a significant level of abstraction. When faced with real problems and challenges, you will have to make a decision based on your own experience and existing knowledge.
