Economic Research

Economic research is the process of studying, examining, and analyzing economic events. It is characterized by the use of statistical methods, models, and graphical representations to demonstrate the events. It is done to understand and bring solutions to problems existing in the economy. 

Researching has numerous benefits. They help gather information, induce technological change, and suggest policy improvements. Research helps bring about changes on a large scale and can often lead to positive outcomes. The core of economics revolves around the concept of scarcity and helps assess different ways of distributing available resources to benefit the majority.

Economic research is an in-depth and systematic way of examining and exploring the field of economics. It may be regarding events, issues, or even governmental policies. It is a scientific and systemized inquiry into the subject to discover new theories and facts or verify the existing ones. This involves the verification of patterns, correlations, and natural laws that govern them through the application of scientific methods. 

Research in economics is not restricted to the study of an economy; it also extends to economic theories, econometrics, and finance. In a broader sense, they also involve the study of governance institutions and systems, productivity and innovations, health, and sustainable living.

It boils down to two significant factors: observing trends and predicting the relationship. The process involves studying elements of the economy and observing the facts and trends the data portrays. The trends over time reveal patterns, and these patterns, along with the actual reality or facts, help economists and related parties identify and analyze problems. Predictions of relationships are what help them decipher the connection or correlation between the facts and the cause-and-effect relationships.

Researching economic elements can be beneficial in many aspects; however, they also come with limitations. Reasons such as positive outcomes not always being guaranteed, the scope of study being limited, and limitations in funding can all negatively impact results.

Data collection as part of research includes a variety of methods, and they can be classified into two broad methods: 

#1 - Quantitative Methods

The quantitative research approach is conducted using objective, deductive, and generalized procedures. They emphasize constructing general theories that can be applied universally. Under this approach, the process and procedures applied are deductive, and typically, earlier theories are tested by operationalizing them. This economic research methodology includes structured interviews, laboratory observations, questionnaires, etc. 

#2 - Qualitative Research

The qualitative research approach focuses on the inquiry into data by bringing in a perspective of interpretation of paradigms and critical theories. It discovers patterns through emergent research designs that are flexible according to the objectives. It tries to establish a correlation based on the closeness between those employed in economic research positions and the sample population they study. The procedures used here are a mix of subjective, contextual, and inductive. Here, existing theories are used as a reference point from which further theories are developed through the formation of new concepts. They include participant observation, group discussions, semi-structured interviews, etc.

Given below are some of the steps that are followed during the economic research:

#1 - Defining Research Problem

The first step is defining the problem to be investigated, as this forms the foundation upon which further research is built. The study could focus on a general area or a specific area to study. Factors such as the rationale behind choosing the subject, aims and objectives, questions that need exclusive answers, etc., should be clearly outlined in this step. A clear definition helps bring clarity in terms of the data to be collected, the techniques employed for collection, the hypothesis to be tested, and other potential areas of exploration.

#2 - Review of Literature

Reviewing literature involves reviewing the relevant sources of knowledge in relation to the research question to gain insights. This includes reviewing academic journals, articles, published books, reports, conference proceedings, and other sources. The purpose of a literature review is to understand where the researchers stand or the current knowledge they possess, as well as the related theories, key concepts, and standard methods involved. Reviewing helps refine the research question and develop a framework to achieve the end goal. 

#3 - Formulation of Hypotheses

The hypothesis is the creation of a tentative statement that is formulated to be tested for empirical and logical concepts. The experiments conducted provide probable explanations of an occurrence through the establishment of a correlation between independent and dependent variables. Most importantly, they provide insights into the analytical methods to be used.

#4 - Research Design

Developing a research design concerns the development of a framework or structure within which the research is conducted. It outlays proper plans for the collection, elimination, measurement, and analysis of data.

#5 - Collection Of Data

The step concentrates on establishing the source of collection (primary or secondary), tools to be used (census and surveys), and methods to be employed (interview, observation, case study, etc.) This step forms a crucial step in the process, as the collected data serves as the basis for the entire research.

#6 - Analysis Of Data

Analysis of data is gathering inferences from the collected data. It is done by categorizing data, coding them through tabulation, etc. This requires the appropriate application of statistical tools and techniques and hence requires data to be accurate.

#7 - Report Writing

There are two critical components involved in establishing a good report. The first one is the researcher's ability to analyze and communication skills. The report should be presented clearly in a manner that conveys the methods, context, and inferences. They also mention the limits of the research and questions that remain unanswered within the context of the study.

Let us look into some examples to gain better insights into the topic.

Example #1 - A hypothetical example 

Suppose Dan is an economic research assistant; he wants to assess the effect of climate change on the lives of people. 

He defines this as his scope of research and chooses to gather information through a qualitative method of data collection, i.e., interviewing people.  Dan prepares a questionnaire and fills it with questions about their wages and monthly expenditures, specifically energy and health expenditures. Through these questions, he hopes to find answers to how the climate change crisis impacts them economically. His research findings will be submitted to the government, which will analyze the findings and formulate policies based on them.

Example #2 - A real-life example

An article titled Value of Economic Research authored by David Zilberman and Amir Hayman, talks about research in addressing transport congestion in the EU (European Union). It brings attention to congestion and pollution in the area and reveals that congestion accounts for 2% of its GDP. Similarly, the cost of noise and air pollution affect GDP (gross domestic product) by 0.6%. The reason cited is an increase in private transportation. The authors suggest restrictive and alternative measures to solve it. This includes the establishment of tolls or charges for using roads. The article emphasizes the importance of research in economic issues and how they can suggest improvements in policies formulated.

Some of the points that highlight the importance of research in economics are given as follows:

#1 - Policy Formulation

One of the expected significant outcomes of research is policy formulation. Research on economic elements helps nations by providing insights into the efficiency of markets and the factors influencing them. The government uses this data collected to frame policies for economic growth.

#2 - Investment Opportunities 

It helps in understanding high-performing sectors and sectors with growth potential. Investors and businesses can identify investment opportunities. Governments, on the other hand, can frame policies that bring these sectors into a growth trajectory.

#3 - International Trade

Researching helps in understanding global dynamics and drivers of international trade. This reveals existing issues and areas with scope for improvement. They help in cementing positive relationships between countries and contribute to economic growth.

#4 - Socio-Economic Development

Economic research highlights the issues faced by people living in a nation. The problems may range from wages to income inequality, unemployment, health, education, poverty, and environmental issues. The study of these factors and how they impact the lives of the general population helps formulate policies that improve inclusive growth.

#5 - Business Growth

Research on broader fields of economics helps businesses understand the market and how the economy is doing on a local and global level. This helps them formulate policies that push their products and services to profit. Additionally, this could also help improve their corporate social responsibility and work for the welfare of their nation.