Economics and The Economy

The relation between economics and the economy, simply saying, is that of theory and practice. While the former is a discipline studying the economic behavior of the human beings, the latter is a still frame picture of it. Economics will come out with theories of the market, employment, etc., and an economy is a real picture of the things which emerges after the application of those theories.

The economy is economics at play in a certain region. This region is best-defined today as a country, a nation- the Indian Economy, the Russian Economy, The French Economy, etc. The economy as such means nothing. It gets meaning once it is preceded by the name of a country, a region, a block, etc. When we say developed countries.

Countries of the world might be facing some common economic challenges. At the same time, they might be facing some highly specific challenges. Economists, during the period of evolution of economics, have suggested some fixed number of theories and the methods of solving those economic challenges. now it depends upon the choice of the countries as to which set of principles and theories they select for solving their economic challenges. Further, many countries selecting the same remedy and tools to fight the same problems might have similar or dissimilar results during a given period. At the same time, two economies selecting different tools to solve the same economic problems might experience the same results or completely different results. Why is this so?

Basically, economic theories are expectations of human behavior about their economic activities and as human behavior depends greatly on many internal and external factors, the results are likely to have diversities. The level and quality of natural resources, the quantity and quality of human resources, the socio-political milieu, the historical background, the psychic make of the human resource, etc., are some of the factors which individually as well as collectively impact an economy while carrying out economic activities. these things make it highly difficult for economists to forecast the kind of impact a particular economic setting. Ultimately, implementation and delivery systems also play a highly vital role in solving economic challenges in a country, which economists started studying after the 1960s. Therefore it is correct to say that economics has less diversity than the economies. There will not be an exaggeration if we say that no two economies of the world are exactly the same, though we might classify them into broader categories like developed and developed and developing, agrarian and industrial, etc.

This diversity makes economics a highly interesting discipline. It is through these diverse facts of the economies that economists have been able to modify and remodify their ideas on the subject of economics. The evolutionary history of economics is nothing but modifications in the past theories on the basis of contemporary results and experiences of the economies. It will be correct to say that economies has developed out of real life practices and especially from the evolution of practice into theory. As practies will be having newer dimensions, the theories of economies will also have newer and more imaginative dimensions.