Ever thought about what is the #1 problem all countries face? I searched and multiple sources said that an economy's number one problem is scarcity. There is an unlimited demand from humans but there are only limited resources. It becomes now a problem when the government has to answer these questions:
1. What to produce?
2. How to produce?
3. Whom to distribute the product?
With limited resources, the government has to decide on the most profitable product to make. They have to find a way where they minimize the costs but maximize the profit. But then they have to ask themselves who should benefit from the end product? Some government decide based on wealth. If you are rich, you get the best products or services. Some governments distribute it equally or based on needs but this usually happens in totalitarian authorities. Some governments mix it up and give some to those in need but also to those who pay taxes the highest.
There is a lot of reasons why this problem can't be solved for good. One is that there will always be needs from people. The population keeps growing and growing. The resources keeps on dwindling down. Not to mention corruption. Will there be a time where we would all have to literally fight for resources?
Scarcity is considered as a major problem leading to inflation and poor economy development, we can’t say same for every country depending on their problem. Scarcity can be dealt with firstly the government is not always in charge of common products yet there’s still scarcity and we need to study why, what usually leads to scarcity of local products meanwhile involving the government we all know their common aim either for self benefit or to satisfy just few people.
In terms of what to produce I observed underdeveloped countries are always affected mostly the local produce, we all know if things are not right with the locals there’s definitely a problem meanwhile average citizens still struggle to meet their ends meet. What to produce might not stand as the major point rather how can a country generate multi income from that produce firstly it’s impossible to sustain a country with just one produce reason why mono-economy country finds it hard to make progress. Basically when a product is considered scarce people find every means to own one so instead of complaining why not search for a unique product for example oil, agriculture etc.