Economics Grade XI Concept of economic development and Economic Growth
It is difficult to give accurate and universally acceptable meaning of economic development. Economic development is a dynamic and multidimensional concept. The concept of economic development is changing with time. It is relatively a recent concept of economics and related with the developing countries.
The various economists have defined the economic development in different ways in different period of time prior to 1970s economic development was seen as the increase in gross national product or increase in GNP per capita, Which is obvious from following definition.
All these traditioal definitions focus on increase in per capita income or output or real GNP But these definitions could not pay attention on real problems faced by developing countries like Nepal, India,Bangladesh,Pakistan etc. Some Developing countries like India,China and Brazil are achieving high growth rate of GNP but the majority of people of these countries the same as they were. The Fruit of economic development and growth was not received by the majority of people of these countries. Hence there is change in this view in recent year.
Concept of Economic Growth and Economic Development
An increase in aggregate output of goods and services in a country during a given period of time is known as economic growth. According to Simon Kunzets, “Economic growth is a long-term rise in the capacity to supply increasingly diversified economic goods and services to its population.” Hence, it is the process of raising of GNP of a nation over a long period of time. Economic growth is regarded as necessary condition of economic development . high economic growth depends upon price stability of goods and services , access of transport and communication, Provision of primary health and education, establishment of key industries. National income and per capita income are the major indicator of economic growth. It is related to developed countries.
Economic development involves something more than economic growth. Development is taken to the main growth plus change. Economic development encompasses not only growth but also distributional and structural changes that imply an improvement in the standard of living people. However growth is essential for development, for achieving other objectives without sustained economic growth, The continuous improvement in the economic opportunities and status of people is impossible.
According to famous development economists Michael P. Todaro. ” Economic development is regarded as a multidimensional process involving major changes in social structure, popular attitudes and national institutions as well as acceleration of economic growth, reduction of economic inequality , eradication of absolute poverty.” Hence, Economic development is a complex process related to many economic and non-economic factors.c
Characteristics of Developing Countries
A developing country is one where the process of economic development has started, but not completed. Hence, the developing countries that are trying to develop fast but are lagging far behind in the race of development. They are comparatively less developed to western economics of Europe and North America. The Developing Countries have following characteristics:
- Low Per capita income: The Developing Countries are poor. So, the per capita income is very low. The majority of people live below poverty line in developing countries. The per capita income of Nepal was US$ 766 in 2016 which is very low compared to developed countries like USA ($53,470) Canada($52,210), Norway($102,700)
- Mass poverty: The existence of mass poverty is the main characteristics is the main characteristics of developing countries. The general level of living is very low for the majority of people. Most of the people are not able to fulfill the basic human needs in these countries. Large propositions of populations in these countries live below poverty line below the poverty line.
Indicators of Economic development
Indicators of economic development means the changes which take place when a country goes on developing process. Measurement of economic development and to express infinite index is very difficult task in economics. So many opinions are found to indicate the condition of economic development of a nation. However, some common and popular indicators that used to measure economic development.
meaning of keywords
Economic Development : It is a process of changing or improving living standard of people
Developing Countries : Countries having low living standard of people and low per capita income
Important Answer Questions of Indicator Economic Development
- What is economic development ? Explain the indicators of economic development ?
- Explain the characteristics of developing countries?
- What is meant by capital formation ? Explain the process of Capital Formation?
- What are the indicators of economic development? Explain