Basic Concepts of Economic Development

Basic concepts of Economic Development

Economic Development

·      Economic development is not considered as the economics of advanced capitalist countries and it is focused on poor and underdeveloped nations.

What is Development?

— Development implies change. Development describes the process of economic and social transformation within the countries.

             Economic development studies the causes of underdevelopment and poverty and its removal. It is the shift from the wealth of nations to the poverty of nations.

— Economics of development refers to the problems of the economic development of underdeveloped countries.

G.M Meier:

Economic development is a process, whereby the real per capita income of the country increases over a period of time.

— This definition explains the three ingredients of economic development (1) process (2) real national income and (3) a long period.

Process:

1. refers to social, technological and economic forces, which stimulate economic development and help in accelerating its pace.

2. Process refers to dynamic changes that help in raising the real national income of a country.

3. Economic development is a dynamic process.

— Real NI: other things being equal, there is a positive correlation between the real national income and economic development

1. Higher the real national income of a country is considered an indicator of higher economic development and vice versa.

2. Real national income is a measuring rod of economic development.

3. The word “real” means the purchasing power of national income should be taken into account for quantifying development.

Long period: the continuous increase in the real national income over a long period of time becomes an essential condition for accelerating development.

1. An increase in the long period is essential for sustainable economic development.

2. The economic development is not only a short-term phenomenon but a long period of the process too.

Maddison

 “the rising income levels are generally called economic growth in rich countries and in poor countries, it is called economic development”.

Bernard Okun and Richard W Richardson:

1. Economic development may be defined as a sustained secular improvement in well-being which may be considered to be reflected in increasing flows of goods and services.

2. It stresses on three important aspects of development: (1) economic development is a dynamic and long-term phenomenon (2) it implies an improvement in material welfare (3) national output is the measuring rod of material welfare.

UN Expert Committee:

development is concerned not only man’s material needs but also the improvement of the social condition of his welfare.

— Development is therefore not only economic growth, but growth plus change-social, cultural and institutional as well as economic. This definition encompasses economic and non-economic aspects of development.

C P Kindle Berger:

Economic development implies both more output and changes in the technical and institutional arrangement by which it is produced.

Willamson and Buttrick:

Economic development or economic growth refers to the process, whereby the people of the country or region come to utilize the resources available to bring about a sustained increase in per capital production of goods and services.

Ursula Hicks:

“Economic development deals with the the problem of UDCs whereas Economic growth deals with the problem of developed countries.”

Schumpeter:

“Development is a continuous and spontaneous change in the stationary state which forever alters and displaces the equilibrium state previously existing, growth is gradual and steady change in the long run”.

MODERN INTERPRETATION OF DEVELOPMENT

Dudley Seers:

The meaning of Development

— What has been happening poverty?

— What has been happening to unemployment?

— What has been happening to inequality?

Denis Goulet

Core values of Development

Denis Goulet-The Cruel Choice: A New Concept in the Theory of Development

— Life Sustenance – the ability to meet basic needs

— Self-esteem – to be a person

— Freedom from servitude - to be able to choose