How to Write a Compare & Contrast Essay in Economics

‘Any economic indicator taken in isolation, without comparison with other indicators, says little; when compared with other indicators, it becomes brighter, more expressive. Without comparing economic values with each other, one cannot make the most elementary analysis, the simplest generalizations.’

This expression most accurately describes the task of comparing and contrasting essays in economics. As part of this task, the student not only learns to formulate his thoughts in writing, but also comes to such economic conclusions that acquire value and meaning only when compared to other economic indicators. In this article we talk about the essence of economic comparison and how to cope with comparing and contrasting essays on economics most successfully.

Object, Subject, and Method

Economic comparison and contrast essay is a task that, in accordance with the modern world practice of economic education, is a necessary element in the study of economic theory.
The aim of the essay is to study various types of economic systems, to identify and analyze the similarities and differences between them.

The objects of study are economic systems that arose and developed sequentially in historical time, which existed simultaneously at different stages of the historical process, and which exist at present.

When you look for two objects for your essay, analyze a few of the main potential aspects of economic research:

• comparative analysis of practical economic activity;
• comparative analysis of economic theories or concepts (conceptual fragments) of theoretical knowledge
• comparative analysis of methodological approaches in economic science;
• comparative analysis in the field of economic history or the history of economic thought.

A comparative analysis is carried out in an intercountry aspect, while comparing the economic systems of developed Western countries: the USA, Germany, France, Great Britain, as well as countries with developing economies in Europe, Asia and the generally accepted comparison of Russia, China, India, and Brazil.

As a result of studying the discipline, as well as conducting an independent analysis of economic systems in the course of writing an essay, students should form their own idea:

• on the laws of the economic life of society, presented in the form of a system of economic categories, laws, principles, models;
• on the economic role and functions of the state in the economy;
• on the main directions of the socio-economic policy of the state;
• about the essence of the processes of globalization of the economy, and their impact on social and/or economic policy.

Hint! Above, it was a clue what indicators and characteristics you can compare and contrast in your essay.

Objects to Compare and Contrast in Your Study

• patterns of functioning of market mechanisms and state regulation of the economy;
• types of economic systems (modern and pre-existing) according to their main classifications, and approaches to their classification (typologization);
• basic views on the structure of economic systems, the causes and mechanisms of their evolution;
• main parameters for comparing economic systems;
• basic economic and social indicators characterizing certain parameters of comparison of economic systems;
• algorithm for a comprehensive comparison of economic systems.

What Should You Be Able to Successfully Compare and Compare Economic Indicators and Characteristics?

• identify common and various problems of an economic nature in the analysis of specific situations, propose ways to solve them,
• to highlight and characterize the basic structural elements in relation to specific economic systems;
• identify common and various causes of historical changes in economic systems;
• highlight economic and social indicators characterizing the main structural elements of a given economic system;
• apply an algorithm for a comprehensive comparison of economic systems to specific economic systems;
• highlight the parameters and indicators of comparison of economic systems depending on the formulation of a specific research task;
• apply the methods of comparative analysis of economic systems to determine the reasons for the formation of various differences in the structure, efficiency, and development of specific economic systems;
• use methods of analysis of economic phenomena and processes, methods of designing, designing and programming for a comparative analysis of economic policy;
• own a categorical apparatus and algorithms for comparative socio-economic and historical analysis of the development of various types of economic systems in the context of economic, institutional and socio-economic dynamics.

The Essence of the Comparative Method When Writing an Essay in Economics

Comparison is the most common method of analysis. Each indicator used for assessment and control is relevant only in comparison with another.

The comparison begins with the correlation of phenomena, the compared phenomena are analyzed. The obligatory rule for applying the comparison technique is the comparability of indicators in terms of structure and conditions of their formation since only qualitatively uniform quantities can be compared.

It is possible to distinguish three approaches to comparison and contrast in the essay:

• horizontal comparative analysis, which is used to determine the absolute and relative deviations of the actual level of the studied indicators from the base;
• the vertical comparative analysis used to study the structure of economic phenomena;
• a trend analysis used to study the relative growth rates and growth of indicators over a number of years to the level of the base year, i.e. in the study of the series of dynamics.

The comparison begins with the correlation of phenomena. Remember: only potentially comparable phenomena are analyzed. The obligatory rule for applying the comparison technique is the comparability of indicators in terms of structure and conditions of their formation since only qualitatively uniform quantities can be compared.

A comparison of economic indicators can be carried out in different directions. For example, comparing the reporting data of the enterprise with the planned, it is possible to identify the degree of completion (or non-fulfillment) of the task.

Comparing the actual indicators of the reporting period with similar indicators of a number of past years, they evaluate the results of work in dynamics and the development trend of this economic process.

A comparison of the indicators of the analyzed economic entity with the average similar indicators for the industry reveals the place of the analyzed entity in the market among other competing entities, market share.

By comparing the indicators of the analyzed economic entity with highly profitable economic entities, unused reserves of production growth are identified by similar indicators.

The Main Condition When Choosing Objects for Comparison in the Essay

A prerequisite for comparative analysis is the comparability of the compared indicators, assuming:

• unity of volumetric, cost, quality, structural indicators;
• the unity of time periods for which a comparison is made, for example, if we compare the economic development of two countries over a 50-year period;
• comparability of production conditions if we compare the performance of two different enterprises;
• comparability of the method of calculating indicators.

What You Need to Do Before Writing (Short Algorithm)

1. select the compared objects;
2. choose the type of comparison (dynamic, spatial, in relation to the planned values);
3. choose comparison scales and the degree of significance of differences;
4. select the number of features by which the comparison should be made;
5. choose the type of signs, as well as determining the criteria for their materiality and non-materiality;
6. choose a comparison base.

Example: How to Analyze Economic Systems

So, in order for your comparative essay on economic systems to be comprehensive, you need to describe:

• theoretical views on the economic systems that you are comparing (link to scientific research);
• describe the current or past signs of the compared economic systems;
• to identify the connections and differences between theoretical models and their practical implementation.

In the comparative analysis of economic systems, traditional methods of economic theory are also used, including formal logic, dialectical logic methods, system research methods, methods of socio-spatial and socio-modern research, chronological, classifications, mathematical statistics, historical modeling, etc.

Based on this, a comparative analysis provides:

• two-level analysis of economic systems (theoretical and empirical);
• identification of individual specifics;
• determination of patterns of development of compared economic systems and their models.

Along with this, the comparative method is used in combination with traditional research methods and new methodological guidelines that have appeared in economic methodology in recent decades.

When you compare economic systems, the comparative analysis method is especially effective when combining it with the historical method, and the method obtained as a result of such a combination is called comparative-historical.

The comparative historical method is a way of studying economic systems, in which, on the basis of establishing the general similarity of these phenomena, a conclusion is made about their genetic relationship or difference.

Comparison and Contrast in Economic History

Economic history provides the widest range for the application of the comparative-historical method. It can be used in the study of almost any economic institution and at the same time, you can compare anything: individual enterprises, industries, countries, regions, etc.
In this case, a variety of business processes can also be subjected to analysis:

• privatization,
• nationalization,
• investment activities,
• financial and banking activities,
• industrial development etc.

Studies of Economic Dynamics Through Comparison and Contrast

A comparative historical study of various statistical indices, as well as a comparative analysis of mathematical models that display particular economic processes in their historical dynamics, is very productive, visual and indicative.

A comparative economic analysis of models of economic growth and development, designed not only to identify common and different features of the development of various regions but also to ‘prescribe’ recipes for dynamic economic growth for developing regions or states, is very important here.

Comparison and Contrast in the History of Economic Doctrines

In the history of economic doctrines (the history of economic thought), the comparative historical method has so far been used extremely rarely. In this area of economic research, there are still extremely few works where a comparative analysis of various directions, concepts or theories of individual thinkers would be carried out.

In addition, here, just like in economic history, the problem is not only just writing a comparative work. Any comparison is not an end in itself, but only a launching pad for obtaining results that can advance economic science and practice.

A Small Comparison Example for Your Consideration

Comparison and contrast of the features of economic growth models of highly developed countries (on the example of the United States and leading countries of Western Europe), in the face of a slowdown in global economic growth and uncertain economic prospects, is especially relevant. The economic development of the state, producing a quarter of the global GDP, actively affects the economic and political situation of other countries. Trends and processes taking place in the American economy give an important demonstration effect and are used as guidelines in making economic decisions or developing policies in other countries.

We begin the comparison with government intervention in the economy. If in the USA, it is possible to observe insignificant state interference in market processes, then in the countries of Western Europe there is active state regulation of the economy.

In terms of taxes, taxes and government spending (relative to GDP) are lower in the US than in other countries. In Western Europe, the state plays a crucial role in the redistribution of income; and there is a significantly higher tax burden.

Another different feature is the formation of competition. In the USA, this is the predominance of the mechanism of competition and market pricing, while in Western Europe, it is possible to observe a decrease in the role of free pricing due to government intervention.

Finally, in the United States, it is possible to call the labor market flexible enough, while the unemployment rate is quite high in Western Europe. This happened due to social programs to support poor people (in fact, who did not want to work). But as for the common features of the labor market in America and Western Europe, they both suffer from an influx of illegal labor.

In addition, it is possible to name a few more common features. This is the priority role of the service sector in the structure of the economy, industry as the most important sphere of material production, ensuring a high level of development of other industries, active and continuous financing of R&D by the public and private sectors of the economy, high qualification of employees, including the innovation sphere of the economy, and steady growth rates ; high level of well-being of the population, a high degree of involvement of the national economy in the world economic process.