economic development & economic growth: concepts & determinants economic development &...
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Economic Development & Economic Development & Economic Growth: Concepts & Economic Growth: Concepts & DeterminantsDeterminants
Introduction:
• World Economy is generally classified into:
1.Poor /Underdeveloped Countries2.Developing Economies3.Developed Economies• Earlier ,some theorists were classifying
the world on the basis of some theoretical idealogies and the allignment of the nations with the leaders of these countries as:
1.First World2.Second World3.Third World
Economic Development – Concept
Various definitions of economic Development are based on the following:
A – Economic Development in terms of Real National Income
B – Economic Developemnt in terms of Real Per capita Income
C – Economic Development in terms of Economic Welfare
D – Economic Development – Modern Interpretations
Economic Development as a Multi-dimensional Process:
Micheal P. Todaro Economic development is the process of
“improving quality of human lives”
This process involves:1. Raising People’s Living Levels2. Creating conditions conducive to the Growth of People’s Self-esteem3. Increasing People’s Freedom to Choose
Todaro says,
“ Deve;opment must, therefore, be concieved of as a multi-dimensional process involving major changes in social structures , popular attitudes and national institutions, as well as the acceleration of economic growth, the reduction of inequality and the eradication of poverty”
Tests of Economic Development:
Prof. Walter Krause -
Three Tests of Economic Development:
1. Cumulative Increase in Income for considerable period
2. Benefits for Whole Population
3. Cumulative Increase in Per-Capita Income
Features of Economic Development:
1.Dynamic Process
2.Long Term Process
3.Increase in Real Income
4.Increase in Per-capita Income
5.Multi-dimensional Process
6.Improvement of Quantitative & Qualitativ Variables
Economic Growth – Concept:
Different Terms:
•Economic Development , Economic Growth, Secular Change, Economic Progress, Economic Welfare - connote the same meaning
•All terms interchangeable with Economic Development and Economic Growth
•Economic Growth referes to the Increase in Production
•Economic Development refers to Increase in Production along with Institutional Changes
Economic Development & Economic Growth – The Differences
Basis of Difference
Type of Change
Pattern of Economy
Nature of Process
Discontinuous & Spontaneous Change
Regulated & ControlledEconomy
Increase in Output &Structural Changes
More Output
Advanced & FreeEnterprise Economy
Gradual & SteadyChange
Economic GrowthEconomic Development
Economic Development & Economic Growth – The Differences
Nature of Country
Use of Resources
Increase in Income
Level of Income
Problems of Under-developed Countries
Development of Unused Resources
General Increase in Income in Poor Countries
Achievement of HigherIncome & Output
Maintenance of Already Achieved Income & Output
General Increase in Income in Rich Countries
Use of known & Developed Resourceas
Problems of Developed Countries
Economic Development & Economic Growth – The Differences
Stage of Change First Stage of Transitional Process
Second Stage of Transitional Process
• Difference is Imaginary
• Both are generally Synonyms
• Difference does not serve any economic interest
• All concepts denote the process of change
Determinants of Economic Development
EconomicDeterminants
Non-EconomicDeterminants
Economic Determinants:
1. Natural Resources
2. Population or Human Resources
3. Capital Formation
4. Technical Progress
5. Financial Institutions
6. Size of the market
7. Structural Changes
8.Quantity and Quality of Enterprise
9.Internatiional Factors
10.Technical Coefficients(COR)
11.Financial Stability
12.Skill Formation
13.Development Planning
Non-Economic Determinants:
1. Political Factors
2. Religious Factors
3. Social Factors
4. Hope For Development
5. Freedom from Corruption