Traditional economics is concerned primarily with the efficient, least-cost allocation of scarce productive resources and with theoptimal growth ofthese resources over time so as to produce an ever-expanding range of goods and services. By traditional economics we simply mean the classical and neoclassical economics taught in mostly American and British introductory textbook.Traditional neoclassicl economics deals with an advanced capitalist world of perfect markets; consumer sovereignty; automatic price adjustments; decisions made on the basis of marginal, private-profit, and utility calculations; and equilibrium outcome in all product and resource markets. It assumes economic "rationality" and a purely materialistic, individualistic, self-interested orientation toward economic decision making.
Political economy goes beyond traditional economics to study, among other things, the social and institutional processes through which certain groups of economic and political elites influence the allocation of scarce productive resources now and in the future, either exclusively for their own benefit or for that of the larger population as well. Political economy is therefore concerned with the relationship between politics and economics, with a special emphasis on the role of power in economic decision making.
Development economics has and even greater scope. In addition to being concernec with the efficient allocation of existing scarce (or idle) productive resources and with their sustained growth over time, it must also deal with the economic, social, political, and institutional mechanisms, both public and private, necessary to bring about rapid (at least by historical standards) and large-scale improvements in levels of living for the masses of poverty-stricken, malnourished, and illiterate peoples of Africa, Asia, and Latin America.........................................from "Economic Development", Michael P. Todaro.
