Economic Development
Economic growth and economic developments are two distinct terms quite often used as synonyms, to imply some positive changes that occur in the economy. But a closer and detailed analysis of these two concepts reveals to us that they are neither the same nor synonyms. Economic growth, in simple terms, can be defined as the sustained increase in national income or per capita income over a long period of time. It should be noted here that a short term increase in per capita income or National income will not continue economic growth because such hikes may be due to temporary or irregular disturbances in economy, such as temporary upswings of the business cycle, or the like. Economic growth is thus, under stood as a quantitative notion.
Economic development is much border concepts than economic growth. It is qualitative notion which encompasses social, structural, and organisational and institutional changes. It can be defend as, in the words of Prof. Gunnar Myrdall, “an upward movement of the entire social system.” C.E. Black defines economic development as “the attainment of a number of ideals of modernization such as a rise in productivity, social and economic equalization, modern knowledge, improved institutions and attitudes and a rational co-ordinated system of policy measures that can remove a host of undesirable conditions in the social system that have perpetuated a state of underdevelopment.” (The dynamics of modernisation, C.E. Black)
The process of economic development is a highly intricate phenomenon, influenced by a myriad of distinct factors such as social, economic, political, cultural, psychological etc. According to Prof. Ragnar Nurkse. “Economic development has much to do with human endowment social attitudes, political and social conditions and historical accidents. “Economic development, thus obviously results in the enhancement of resources utilisation, and subsequent improvements in national product, employment, income and standard of living.
To Sum up, Economic development can be termed as a long termed as a long term process resulting in rise in the availability of capital inputs, improvement in labour efficiency and productivity, better entrepreneurial abilities, better transports and communication facilities, urbanisation, growth of financial intuitions, reduction of poverty, increase in mass consumption, improvement in educational and health standards, improvement in life expectancy, reduction in population and infant mortality, widening of the mental horizon of the people and above all the attainment of economic welfare.
Development of Under Development
Though the term ‘under developed economy’ is a widely used one, it is a bit difficult task to define it. Generally poverty is the main factor that incites us to term a country as an undeveloped one, but it can by no means be considered adequate. According to Eugene Stanley, “an undeveloped country is a country characterised by (1) mass poverty which is chronic and not the result of some temporary misfortune, and (2) Obsolete methods of production and social organisation, which means that the poverty is not entirely due to poor natural resources and hence could presumably be lessened by methods already proved in other countries.”
In the words of Prof. Jacob Viner, “A more useful definition of an under-developed country is that it is a country with good potential prospects for using more capital or more labour or more available natural resources, or all of these to support its present population on a higher level of living.”
From the above definitions, an underdeveloped country can be explained a one with the following features.
a) Lower per capita income
b) Underutilized natural and human recourses due to lack of economic development.
c) There exists potential for growth of national income and per capita income by efficient employment of its natural and human recourses.
The above mentioned features, though are the features of under developed countries, are not comprehensive or adequate to define the under-developed state of a country. There are a vast number of factors that bogs a country into a state of underdevelopment. Hence, it is quite a herculean task to bring all the features of an underdevelopment country, into a single and lucid definition.
Characters off under developed countries
v Shortage of Capital
v Excessive Dependence on Agriculture
v Disparities of Income and Wealth
v Dualistic Economy
v Lack of Entrepreneurial ability and technology
v Inadequacy of infra Structure
v Rapid population growth
v Under Utilization of Natural resources
v Poor Consumption Pattern
v Foreign Trade Orientation
v Demographic Features and Social Characteristics
Stages of Development
Economic development is neither spontaneous nor an abrupt phenomenon. It is a continuous and gradual process involving many stages. By identifying these stages, according to certain features, a country can be deemed to have attained a certain stages of development. There are many theories, explaining this transitional process of economies. The simplest sage theory is Fisher-Clarke’s sector thesis. This theory envisages development on the basis of primary, secondary or tertiary production. Countries are assumed to begin as primary producers, then, as the basic necessities of life are met, the resources are shifted to secondary or industrial sector. After some stage, with the increase in income, resources sift to service or tertiary sector. Thus according to this theory, the developing countries are identified as primary producing economies; the more developing countries with the production of manufactured goods are mature developed economies with a sizable chunk of their resources in the service sector. This shift in resources between sectors is due to the difference in income elasticity of demand for commodities. .
Another important theory elucidating the stages of economic growth was propounded by Rostow. The most important point of Rostow’s Theory is that it is possible to identify stages of development and to classify societies according to those stages. He distinguished 5 such stages. They are (1) traditional (2) transitional (3) take-off (4) maturity and (5) high mass consumption.
