Economic Growth and DevelopmentIntroductionIn this chapter, we shall study in outline the evolution of economicthought, the nature and meaning of the concepts of economic growthand development, the basic characteristics of underdeveloped countries(UDCs), the role of government in economic development and Rostowsstages of economic growth.Evolution of Economic ThoughtThe history of economic thought deals with the origin anddevelopment of economic ideas and their interrelations. We find economicideas in the writings of ancient Hebrews, Indians, Greeks, Romans andthe scholars of middle ages. In the words of Prof. Bell, economic thoughtis a study of heritage left by writers on economic subjects over a periodof about 2500 years ; and it freely draws upon all phases of humanknowledge. If we study ancient economic thought, we can have a properunderstanding of the growth of economic theories and institutions.The Hebrew Economic ThoughtThe Hebrews had one of the ancient civilizations of the world.The period dates back to 2500 B.C. The Hebrews never studiedeconomic problems separately. In their writings, they gave top priorityfor religion and ethics. And they gave importance to agriculture. However,the Hebrews had definite ideas on subjects such as usury (interest), justprice, property rights and monopoly.The Hebrew thought was against lending of money on interest tofellow Hebrews. But they could lend money to strangers and get interest.2In those days, as money was borrowed by the poor for consumptionpurposes, they thought that it was unethical to charge high rates of interest.We may note that the Hebrew thought on interest is similar to the ancientIndian thought an interest. The Hebrews had many laws against falseweights and adulteration. They wanted businessmen to charge a just priceand they imposed ceiling on the profit margin. The Hebrews realized thedignity of labour. The Hebrew civilization was a rural and agrariancivilization. One of their proverbs is : He that tilleth the soil shall haveplenty of bread. The Hebrews did not cultivate the land every seventhyear. They left it fallow. The object was to conserve the fertility of thesoil. Another interesting feature of the Hebrew thought was the Jubileeyear. The jubilee year was the 50th year. According to Jubilee year, theland sold to someone was to revert to its owner in the 50th year. Moneywas used during the Hebrew Period. There are references to differentkinds of money in the Old Testament.The Sabbath : The Sabbath was the weekly day of rest, relaxationand good living. In the words of Spiegel, the institution of the weekendwas a social invention that has no parallel in the civilizations of Greece,Rome or other ancient cultures. In short, we find that religion, ethics,law, economics and philosophy were all bound together. Though theeconomic ideas of ancient Hebrews appear primitive to a moderneconomist, we should remember that they had a profound influence onmens minds.Greek thought, Roman law and Christian religion form the basis ofEuropean culture.Economic Thought in Ancient IndiaLife, work and thought in ancient India was not based on a negationof life. It was not based on otherworldliness. As Pandit Jawaharlal Nehruput it, There is no idolatry in them, no temples for the gods. The vitalityand affirmation of life pervading them are extraordinary.The caste system was an important institution in ancient India. But wehave to keep in mind that in the beginning, the basis of caste wasprofession and not birth. It was only during the latter period that the3caste system became rigid and led to many abuses. The joint family wasanother important institution in ancient India. Agriculture was an importantoccupation in ancient India and it was held in high esteem and monarchywas the most popular form of Government. There was a certain amountof decentralization. For example, village assemblies enjoyed ameasurement of autonomy; interest rates were regulated and regulationswere there against false weights and measures. Kautilyas Arthasastragives details of the political, social, economic and military organizationsof the past. Thiruvalluvars Thirukkural is a book of ethics and it dealswith Dharma or Aram (ethics), Artha or Porul (Polity) and Kama orInbam (Love). Valluvars economic ideas are found mostly in the secondpart of the Thirukkural, the Porutpal or the part dealing with wealth. ByPorutpal, Valluvar meant all that kautilya meant by Arthasastra.Valluvar considered freedom from hunger a fundamental freedom. Hewas against begging. He considered industry as real wealth and labouras the greatest resource. According to Thiruvalluvar, agriculture is themost fundamental activity. He tells that the ploughmen alone live as thefreemen of the soil, the rest are mere slaves that follow on their toil.(Kural 1032). For Valluvar, good ethics is good economics.Medieval Economic Thought : The period from 476 A.D, whichmarked the fall of the Roman empire to 1453 A.D., the year in which theTurks captured Constantinople is generally regarded as the Middle Ages.The society of the Middle Ages was a feudal society. People in middleages lived in a natural economy. Men lived largely in small and self-sufficient units. The Church, the Bible and Aristotle exercised a greatinfluence on the life and thought of Middle Ages.MercantilismThe economic ideas and policies which were followed by Europeangovernments from the 15th century until the second half of the 18th centurymay be described as mercantilism. The mercantilists thought that thewealth of a nation could be increased by trade. And they wanted to havemore wealth by increasing the stock of gold and silve