economic development & economic growth: concepts & determinants economic development &...

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Economic Development & Economic Development & Economic Growth: Economic Growth: Concepts & Determinants Concepts & Determinants

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Page 1: Economic Development & Economic Growth: Concepts & Determinants Economic Development & Economic Growth: Concepts & Determinants

Economic Development & Economic Development & Economic Growth: Concepts & Economic Growth: Concepts & DeterminantsDeterminants

Page 2: Economic Development & Economic Growth: Concepts & Determinants Economic Development & Economic Growth: Concepts & Determinants

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

Page 3: Economic Development & Economic Growth: Concepts & Determinants Economic Development & Economic Growth: Concepts & Determinants

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

Page 4: Economic Development & Economic Growth: Concepts & Determinants Economic Development & Economic Growth: Concepts & Determinants

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”

Page 5: Economic Development & Economic Growth: Concepts & Determinants Economic Development & Economic Growth: Concepts & Determinants

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

Page 6: Economic Development & Economic Growth: Concepts & Determinants Economic Development & Economic Growth: Concepts & Determinants

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

Page 7: Economic Development & Economic Growth: Concepts & Determinants Economic Development & Economic Growth: Concepts & Determinants

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

Page 8: Economic Development & Economic Growth: Concepts & Determinants Economic Development & Economic Growth: Concepts & Determinants

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

Page 9: Economic Development & Economic Growth: Concepts & Determinants Economic Development & Economic Growth: Concepts & Determinants

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

Page 10: Economic Development & Economic Growth: Concepts & Determinants Economic Development & Economic Growth: Concepts & Determinants

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

Page 11: Economic Development & Economic Growth: Concepts & Determinants Economic Development & Economic Growth: Concepts & Determinants

Determinants of Economic Development

EconomicDeterminants

Non-EconomicDeterminants

Page 12: Economic Development & Economic Growth: Concepts & Determinants Economic Development & Economic Growth: Concepts & Determinants

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

Page 13: Economic Development & Economic Growth: Concepts & Determinants Economic Development & Economic Growth: Concepts & Determinants

Non-Economic Determinants:

1. Political Factors

2. Religious Factors

3. Social Factors

4. Hope For Development

5. Freedom from Corruption

Page 14: Economic Development & Economic Growth: Concepts & Determinants Economic Development & Economic Growth: Concepts & Determinants