ECONOMIC DEVELOPMENT
Economic development is the increase in the standard of living of a population.
Economic development includes economic growth. The study of economic
development includes theories of the causes, the process, and the policies by which
a nation improves the economic, political, and social well-being of its people. From
other perspectives, economic development is related to literacy rates, life
expectancy, poverty rates, health, and education. In fact, these indicators are more
related to economic growth so that development goes often with growth.
Economic development aims at improving the well-being of citizens based on
different scales of priorities, depending on the level of economic enhancement of
societies. Enhanced economies go over the basic necessities to provide a higher
quality of life.
The task of economic development is influenced by a number of factors such as—
economic, political, social, technological, natural, administrative etc. According to
Lewis, there are three principal causes of economic development.
These are:
1. Efforts to economize, by reducing the cost of any product
2. Increase in knowledge and its appropriate application;
3. Amount of capital or other resources for land.
Economic development of a country thus depends on both economic and non-
economic factors.
There are some of important economic and non-economic factors determining the
pace of economic development in a country:
Economic Factors:
1. Population and Manpower Resources - Population is considered as an important
determinant of economic growth. Firstly, population provides labor and
entrepreneurship as an important factor service.
Natural resources of the country can be properly exploited with manpower
resources. Manpower resources can provide useful support to economic
development.
On the other hand, higher rate of growth of population increases demand for goods
and services as a means of consumption leading to increasing consumption
requirements.
Accordingly, higher rate of population growth can put serious hurdles on the path of
economic development.
Thus whether growing population in a country practically retards economic growth
or contributes to it that solely depends on the prevailing situation and balance of
various other factors determining the growth in an economy.
2. Natural Resources and its Utilization -In spite of having huge variety of natural
resources, some countries of Asia and Africa could not attain a higher level of
development due to lack of its proper utilization. But countries like Britain and
France have modernized their agriculture in spite of shortage of land and the
country like Japan has developed a solid industrial base despite its deficiency in
natural resources.
Thus in conclusion it can be observed that availability of natural resources and its
proper utilization is still working as an important determinant of economic growth.
3. Technological Advancement - Technological advancement implies improved
technical know-how and its broad- based applications. It includes:
a. Use of technological progress far economic gains;
b. Application of applied sciences resulting in innovations and inventions;
4. External Factors - External factors also play important role in sustaining the
economic development:
a. Growing export earnings for financing increasing import bills required for
development;
b. Increasing flow of foreign capital in the form of direct foreign investment;
c. International economic co-operation in the form of increasing flow of foreign
aid from advanced countries.
Non-Economic Factors
Economic factors alone are not sufficient for determining the process of economic
development in a country. There are some of the important non-economic factors
determining the pace of economic development in a country:
1. Urge for Development - It is the mental urge for development of the people in
general that is playing an important determinant for initiating and accelerating
the process of economic development.
2. Spread of Education - Economic progress is very much associated with the
spread of education.
3. Proper Maintenance of Law and Order - Maintenance of law and order in a proper
manner also helps the country to attain economic development at a quicker
pace. Stability, peace, protection from external aggression and legal protection
generally raises morality, initiative and entrepreneurship.
OBSTACLES OR CONSTRAINTS ON ECONOMIC DEVELOPMENT
Underdeveloped or developing countries are facing several constraints or obstacles.
These obstacles are:
Adverse International Forces - Certain adverse international forces are operating
against the underdeveloped countries which are always going against the interest
of the underdeveloped countries.
Political Instability - Most of the underdeveloped countries are facing the problem
of political instability resulting from frequent change of government, threats of
external aggression and disturbed internal law and order conditions.
All these economic, political and social factors are equally responsible for the poor
socio-economic set up of underdeveloped countries.
Economic growth enables the possibility to deal with many serious problems of
poverty, homelessness. However there are several issues, which suggest that
economic growth, has contributed to serious social, environmental and economic
problems, which have reduced living standards. This is not to say economic growth
is doomed to bring unhappiness. In fact the challenge is to harness the potential of
economic growth to make sure it really does increase sustainable living standards.
