Understanding Economic Development and Growth
Economic development and growth are essential factors in measuring a nation's progress over time. Economic development involves changes in resources, skills, efficiency, literacy, and living standards, ultimately increasing the supply of goods and services. On the other hand, economic growth pertains to the increase in real national income, leading to improved living standards. Indicators include real national income, welfare enhancement, technical changes, efficient resource utilization, increased government revenue, and social security measures.
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Meaning of Economic Development and Growth. Indicators and Significance of Economic Development. Indicators and Factors of Economic Growth. Differences between Economic Development and Growth.
Economic Development Meaning: economy s real income of national as well as per capita income of over a long period of time. Economic development also referred to as the quantitative and qualitative. Economic development changes the supply resources , skills and efficiency , literacy ratio , structure of demand for goods , consumption habits , living standard , level and pattern of income etc. Economic development is a process whereby an
Definitions: Prof . Meier and Baldwin. where an economy real national income increases over a long period of time. Simple Definition. It refers to the process where by the total supply of goods and services of the society increases leading towards improved living standard. Economic development is a process
Indicators of Economic Development Real National Income. There are the two types of real national income and they are nominal and real. Nominal means the actual national income for the period of time which measured in numbers. Real means the purchasing power or how much goods and services can we brought from the national income. Increases in Welfare of the People. Economic wants of the people are satisfied easily they get better facilities of Education , Health , Transport , Better standard of living etc .
Technical Changes. more output of all sector and more welfare of economy by which it increase the national income. Efficient use of Natural Resources. Economic development refers to the process where people utilise the resources . Example ...country like Afghanistan , Bhutan are not very well developed even though they have enough natural resources. Development Agriculture. High agriculture productivity and developed agriculture makes the country self-sufficient in food grains , cash crops etc it means we are more economic developed. Economic development indicates
Increase in Government Revenue. Economic development increase the level of national output and per capita income so tax paying capacity of people increase and the government can collect larger revenue by way of taxes. Social Security. If the government is looking after old handicapped person and also the unemployed and poor then such social security measures adopted by the government.
Economic Growth Meaning: production of goods and services in an economy. Economic growth is commonly measured in terms of the increase in aggregate market value of additional goods and services produced using GDP. Increase in capital goods , labour force , technology and human capital can all contribute to economic growth. Economic growth is an increase in the
Definitions: Michael P. Todaro: Economic growth is steady process by which the productivity capacity of the economy is increased over time to bring rising levels of national output and income. Simon Kuznets: Economic growth may be defined as a long term process where the sustainable and sustain rise in real national income , total population and real per capita income takes place. Per Capita Income = National Income/ Population
Indicators of Economic Growth o Significance of Industrial Sector: Industrial sector capacities to utilise all resources of production to maximise national income and to provide employment for the jobless people. These countries receive the major portion of their national income from the non-agriculture sectors which include industry , trade , transport , communication.
o High Rate Capital Formation: Grown countries are generally very rich as they maintain a high level of savings and investment with the result that they have huge amount of capital stocks. The rate of investment constitutes 20 to 25% of the total national income. The rate of capital formation in these countries is also very high. o Poverty: The subcategory covers income distribution and poverty. Poverty is measured nationally and separately as a percentage of rural percentage and urban populations.
o High Production Techniques and Skills: have become an essential part of economic growth process in the developed countries. The new techniques have been used for the exploitation of the physical human resources. High production techniques and latest skills that the countries like Japan , Germany and Israel could have developed their economics very rapidly though they have limited natural resources. High production and skills
o Low Growth of Population: like the USA , the UK and other western European countries have low growth of population because they have low level of birth rate followed by low level of death rate. Good health condition high degree of education and high level of consumption of the people have led to maintain low growth of population followed by low level of birth and death rates. The developed countries
Factors of Economic Growth 1.Economic Factors: a. Natural Resources: In fact natural resources are a necessary condition for economic growth but not a sufficient one. Among the natural resources the land area and the quality of the soil , forest wealth , good river system , minerals and oil resources , climate etc. b. Capital Formation: Capital formation is cumulative and self feeding and includes three interrelated stages the existence of real savings and rise in them , the existence of credit and financial institutions , to use these savings for investment in capital goods.
c. Technological Progress: most essential in the process of economic growth. d. Human Resources: A good quality of population is very important in determining the rate of economic progress. Economic growth investment in human capital in the form of educational and medical and such other social schemes is very much desirable. The technological changes are
e. Social Overheads: social 0verheads like schools , colleges , technical institutions , hospitals and public health facilities. f. Transformation of Traditional Agriculture: Population changes from the primary sector to the secondary sector and then to the tertiary sector. Agriculture is the main occupation of the 70-80% population. Economic growth is the provision
2. Non Economic Factor: a. Political Factor: strong administration are essential and helpful in modern economic growth. The countries like the UK , USA ,Germany etc have reached the level of highest economic growth in the world. b. Social and Psychological Factors: Social factors include social attitudes , social values and social institutions which changes with the expansion of education and transformation of culture from one two another society. Political stability and
c. Education: development. Greater progress has been achieved in those countries where education is wide spread. d. Urbanisation: Another none economics factor promoting development is the process of urbanisation. The structural change in the size of population in rural and urban sectors. Education is main vehicle of
Difference Between Economic Development Economic Growth The basic feature of economic development is to rise income level and improve human being. Economic development is the main issue under modern economics. According to various economists economic development refers to the qualitative approach. The term economic growth is only concerned with raising income level and volume of production. Economic growth is the key issue under traditional economics. According to various economists economic growth is said to be quantitative approach.
The concept of economic development is more important because it discusses an economy in wider sense. growth is less important due to the attachment with income level only. The concept of economic growth is not concerned with the political stability. The concept of economics development is incomplete without political stability. Economic growth is a short term process about one year. Economic development is a long term process about 20 to 25 years. The concept of economics
