Development to Globalization - Notes
1. Difference between Development and Underdevelopment
Development refers to a stage where an economy improves in income, living standards, education,
and technology, while underdevelopment refers to stagnation with low income, poor living
standards, and backwardness.
• Development: High per capita income, industrialization, advanced technology, and better living
standards.
• Underdevelopment: Low per capita income, dependency on agriculture, outdated technology, and
poor infrastructure.
• Developed countries: USA, Japan, Germany.
• Underdeveloped countries: Nepal, Bangladesh, many African nations.
2. Difference between Economic Development and Economic
Growth
• Growth means a quantitative increase in income and output (GDP).
• Development means qualitative and quantitative improvement — growth with social progress.
• Growth is short-term; Development is long-term.
• Growth focuses only on income; Development includes health, education, equality, and welfare.
• Example: GDP increases by 5% (growth). GDP + literacy + health improvement (development).
3. Classical Theories of Development
Classical theories explain development through capital accumulation, labor productivity, and market
forces, led by economists like Adam Smith, David Ricardo, Malthus, and J.S. Mill.
Adam Smith: Growth through division of labour, capital accumulation, and free market (Invisible
Hand).
David Ricardo: Growth limited by diminishing returns in agriculture; leads to a stationary state.
Thomas Malthus: Population grows faster than food supply, leading to poverty and stagnation.
J.S. Mill: Growth depends on capital and technology; stationary state is stable and moral.
Common features: Capital accumulation, population, free market, full employment, and limited
government intervention.
4. Globalization and its Features
Globalization is the process of increasing interconnection among countries through free flow of
goods, services, capital, and technology. It integrates national economies into the world economy.
1. Free Trade – Reduction of tariffs and quotas.
2. Free Flow of Capital – Encouragement of FDI and global investment.
3. Free Movement of Labour – Migration for employment opportunities.
4. Integration of Markets – National markets combine into a single global market.
5. Technological Advancement – Rapid spread of innovation and digitalization.
6. Growth of MNCs – Expansion of multinational corporations.
7. Global Communication – Advancement in internet and transport.
8. Cultural Exchange – Sharing of traditions and lifestyles.
9. Outsourcing and Offshoring – Production moved to cheaper locations.
10. Global Competition – Improves efficiency and product quality.
5. Impact of Globalization on Development
Globalization has both positive and negative effects on developing countries, influencing economic,
social, and technological aspects.
Positive Impacts:
• Higher GDP and economic growth.
• Increased FDI and foreign investment.
• Employment opportunities in industry and services.
• Technological transfer and innovation.
• Expansion of global markets.
• Improved living standards and access to goods.
• Development of infrastructure and connectivity.
• Global cultural understanding.
Negative Impacts:
• Income inequality and social gap.
• Job insecurity in small industries.
• Cultural erosion and western influence.
• Environmental damage due to industrialization.
• Economic dependence on developed nations.
• Brain drain and migration of skilled workers.
• Global market instability.
Conclusion:
Globalization accelerates economic development by promoting trade, investment, and technology.
However, it must be managed carefully to reduce inequality, protect culture, and ensure sustainable
and inclusive growth.