The Origin Of The Wealth Of Nations Essay

1847 Words Apr 22nd, 2015 8 Pages
What is the origin of the wealth of nations? This question posed by Adam Smith, the architect of classical economics, is appropriate starting point to understand how economic systems are essential to understanding national development. The wealth gap between countries can be attributed to the divergent national economic histories each nation possesses. Smith equates wealth with economic growth that arises from a growing source of labour and capital stock, increased efficiency in the use of capital and labour through greater division of labour and technological progress, and the promotion of foreign trade. Smith contends that the primary cause of the wealth gap arises from differences in productivity resulting from the division of labour. This division of labour is originates from humans’ propensity to exchange, while the productivity of the individual ceteris paribus is maintained by self-interest. Although today many recognize the division of labor as an ingredient to economic success, economists since Smith have built, critiqued, and engaged with his views to articulate other factors that contribute to differences in national development that are reflected in different ideas about trade, taxation, government spending, interest rates, and the flow of goods in an economy. To understand how Adam Smith came up with his ideas, it is important understand the different forces that emerged during and after the Rennaisance to prompt an interest in the study of economics. The…

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