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Development
Economics
Chapter outline:
•
Growth Vs Development
•
Elements of Development
•
Structural
Changes
Development process
•
Objectives of Development
in
Difference Between Growth and Development
Generally, the terms Economic Growth and Economic
Development are used to convey the same idea i.e. Economic
Progress. However, the term Economic Development is more
comprehensive in its scope than Economic Growth.
ECONOMIC GROWTH:
The increase in the Real GNP of a country over a long period
of time is known as Economic Growth.
OR
The increase in Real Per Capita Income of a Country over a
long period of time is known as Economic Growth.
Difference Between Growth and Development
ECONOMIC DEVELOPMENT:
Economic Development refers to the situation of a country
where its Real GNP and Real per capita income is increasing
over time with structural changes in the various economic
sectors of the economy.
Economic Development means economic growth plus
structural changes in the economy.
Eco. Dev.= Economic Growth + Structural Changes
Elements of Economic Development:
1. Long Term Process:
Economic Growth is a long- run process involving a
period of decades. A short-term increase in national
income for a few years is not considered as
economic growth.
2. Rise in productivity:
Economic Growth is always associated with
substantial rise in productive capacity of the
economy. The rise in real output can be achieved by
proper utilization of natural resources and human
resources and better techniques of production in all
sectors of the economy.
Elements of Economic Growth…. continued
3. Rise in real per capita income:
Economic Growth is accompanied by substantial rise
in real per capita income. This can be possible only if
the real per capital income is higher than the rate of
growth of population over a long period of time.
4. Greater equality in the distribution of income:
There should be greater equality in the distribution of
income and reduction of unemployment in the
country.
STRUCTURAL CHANGES:
(1) Changing Occupational Structure:
As the level of economic development rises, the
percentage share of labour working in primary sector
(farming, fishing, mining etc) begins to decline whereas
the percentage share of working population in
Secondary Sector (manufacturing and service sector)
increases.
(2) Changing structure of Industrial Production:in the course of economic development, industrialization
takes place in the country. The proportion of capital
goods in the total industrial output rises and that of
consumer goods declines.
STRUCTURAL CHANGES:
(3) Changing Sectoral Structure of national output:
In the process of economic development, there takes
place a visible change in the relative contributions of
primary, secondary and tertiary sector (Services and
commerce portion of an economy).
(4) Changing structure of foreign trade:-
As the country develops economically, the share of
primary goods in the total exports leads to decline and
that of the manufactured capital goods goes up. Likewise, the share of consumer goods in total imports falls
and those of raw material capital goods rises.
STRUCTURAL CHANGES:
(5) Technological Progress:
In the development process, there is a technical break
through in agriculture, transport, industries, communication
and other sectors of the economy. The traditional
techniques of production gradually give away to science
based automated techniques.
(6) Social, institutional changes:With the development of an economy, there is general
urbanization and the adoption of modern methods of
thinking, producing and consuming. There are changes in
behavioral, institutional and organizational factors. The
propensities to take risk, innovation and investment
become more Sharpe.
Objectives of Development
1.Provision of Basic Needs: The primary objective of
development is the provision and expansion of basic human
needs such as food, clothing, shelter, health and protection.
2. Raising Level of Living: Another important objective of
development is to raise the level of living of the people by
providing them higher incomes, more jobs, better education,
greater freedom and self respect.
3. Expanding the range of Economic and Social Choices: in
addition to the above advantages of economic growth,
development must include the increase in human choices.
People should have the freedom to choose greater leisure,
political freedom and equality of opportunity.
Objectives of Development…continued
4. Poverty elimination
Poverty elimination is an important development objective but
all models applied to this problem have not borne fruit. In
fact unemployment and poverty has been increasing in the
developed countries in recent years.
5. Universal Education
Another important development objective that has been
addressed to some extent. In developing countries, however,
many educated persons are facing unemployment or
underemployment
Objectives of Development…continued
6.Modernization of Institutions
Although some modernization of political, social and
economic institutions has taken place but this has worked to
the benefit of smaller sections of the population mostly urban
based ones.
7. National Independence
Developing countries have been focusing on superficial
symbols of independence but not tackling the real issues that
are impeding growth and development.
Objectives of Development…continued
8.Economic and Political Participation
This has been practiced to some extent but again most of the
people have been denied access due to one reason or another
9. Grass Root Democracy
Means affording channels to people at the lowest level to
participate in decisions regarding important issues impacting
their lives. Again limited avenues that have been mostly
ineffectual have been afforded, in this regard, to common
people.
Objectives of Development…continued
10. Economic and Social Equality
Large income and social inequalities exist in many developing
countries that hinder prospects of growth and development.
Power and authority is in the hands of a few groups of elites
and most of the people are denied participation in important
areas of politics and economics.
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