The contribution of rwandan health insurance in economic development of rwanda

2.2.2. Economics

According to Parto's Bruce T; pradip tapadar ,( December 2005), economics is the social science that analyzes the production, distribution, and consumption of goods and services.

According to Parto's Bruce T; pradip tapadar, (December 2005), economics aims to explain how economies work and how economic agents interact. Economic analysis is applied throughout society, in business, finance and government, but also in crime, education, the family, health, law, politics, religion, http://en.wikipedia.org/wiki/Economics - cite_note-4 social institutions, war, and science. The expanding domain of economics in the social sciences has been described as economic imperialism. Common distinctions are drawn between various dimensions of economics.

The primary textbook distinction is between microeconomics, which examines the behavior of basic elements in the economy, including individual markets and agents (such as consumers and firms, buyers and sellers), and macroeconomics, which addresses issues affecting an entire economy, including unemployment, inflation, economic growth, and monetary and fiscal policy. Other distinctions include: between positive economics (describing "what is") and normative economics (advocating "what ought to be"); between economic theory and applied economics; between mainstream economics and between rational and behavioral economics. (Bruce T; pradip tapadar, December 2005)

2.2.3. Development

Development has been defined by many scholars in different ways. Some argue that development involves growth of per capita income while others focus improving living conditions of the beneficiaries by reducing inequality of income distribution. According to Kocher (1973:4), development means the process of a general improvement in level of living together with:

i. Decreasing inequality of income distribution, and

ii. The capacity to sustain continuous improvement overtime.

The components of socio-economic well-being are the substance of development. Inevitably, there must be certain arbitrariness in choosing the components to include and their relative importance. A minimal, though not inclusive, set would consist of income, employment, education, health and nutrition and consumption including food, housing and such services as water supply, electricity, transportation police and fire protection. The above definition of development is very significant to rural areas as the author insists on decreasing inequality of income distribution to ensure the well being of the entire population. (Carrin G. 2003:63).

According to Todaro M. (1982:56), development should therefore be perceived as a multi- dimensional process involving the re-organization and re- orientation of entire economic and social system. In addition to improvements in income/output; it typically involves radical changes in institutional, social and administrative structures as well as in popular activities and sometimes even customs and beliefs. Demas (1965:24) asserts that development means a structural transformation of the economy so that:

i. The degree of dualism between the productivity of different regions is reduced.

ii. Surplus Labor is eliminated and drawn into high productivity employment.

iii. Subsistence production is limited and a national market is established for goods and services.

iv. The share of manufacturing and services in GDP is increased in response to the changing composition of demand.

v. The volume of inter-industry transactions increases mainly as a result of the growth of the manufacturing sector.

vi. The ratio of exports increases absolutely and composition of imports shift away from consumer to intermediate and capital goods, and

vii. The economy becomes not only more diverse but also more flexible and adoptable as a result of underlying political social and institutional changes.

From the above definition, it is seen that the author is concerned with transformation of economy in all sectors so as to improve the welfare of the beneficiaries. (Todaro 2000:18) concluded that «development» is both a physical reality and a state of mind in which society has through some combination of social, economic and institutional process, secured the means for obtaining a better life. Whatever the specific components of this better life, development in all societies must have at least the following objectives:

i. To increase the availability and widen the distribution of basic life-sustaining goods such as food, shelter, health and protection.

ii. To raise levels of living including in addition to higher incomes, the provision or more jobs, better education and greater attention to cultural and humanistic values, all of which was served not only to enhance material well-being but also to generate greater individual and national self-esteem.

iii. To expand the range of economic and social choice available to individuals and nations by freeing them from servitude and dependence, not only in relation to other beneficiaries and nation-states, but also to the forces of ignorance and human misery.

Todaro's emphasis is on obtaining a better life through providing basic life sustaining goods, which is in most cases, is lacking in rural areas. Some development economists argue that most of the development planners aim at attaining a high gross rate in the Gross National Product (GNP) regardless of the real goal of development, which is economic growth with justice. Economic growth is not an end in itself; it has a human, social and economic magnitude. This supports the view that development is a many-sided dynamic process, which should benefit the neediest segment of the local population. (M. Todaro 2000:18)