What is Development?
- is also the study of how
- the act or process of growing, economies are transformed from
progressing, or developing. stagnation to growth.
- the process of improving the Economics
quality of all human lives and - is all about making smart choices
capabilities. to cope with scarcity.
- development is a process rather Economic Growth
than an outcome, it is dynamic - Is the most fundamental
that it involves a change from one measurement used to evaluate
state (or condition) to another. the success in allocating scarce
resources.
Economic Growth
- The rise in the money value of The study of economic development is
goods and services produced by one of the newest, most exciting, and
all the sectors of the economy most challenging branches of the
per head during a particular broader disciplines of economics and
period. political economy.
- Quantitative measure Traditional Economics
- an approach to economics that
Economic Development emphasizes utility, profit
- The process of increase in maximization, market efficiency,
volume of production along with and determination of equilibrium.
the improvement in technology, a
rise in the level of living, - it assumes economic “rationality”
institutional changes, etc. and a purely materialistic,
individualistic, self-interested
- Progress of socio-economic orientation toward economic
decision making.
Development Economics
- is a branch of economics that Political Economy
focuses on improving fiscal, - concerned with the relationship
economic, and social conditions between politics and economics,
in developing countries. with a special emphasis on the
role of power in economic
decision making.
- To study the social and Common Features of the
institutional processes through Underdeveloped Countries:
which certain groups of economic 1. Low per Capita Income - The level
and political elites influence the of per capita income is very low in
allocation of scarce productive underdeveloped countries.
resources now and in the future. 2. Poor Level of Living - The vast
majority of people in underdeveloped
Development economics is of greater nations lie under the conditions of
extent than traditional neoclassical poverty, malnutrition, disease, illiteracy,
economics or even political economy. etc.
3. High Rate of Growth of Population
Development economics is far - High population implies greater
concerned with the economic, cultural, consumption expenditure and lower
and political requirements for effecting investments in productive activities and
rapid structural and institutional slows down economic development.
transformations of entire societies. 4. Highly Unequal Income
Distribution - The income inequality
It also focuses on the mechanisms that between the rich and the poor people
keep families, regions, and even entire within the underdeveloped countries is
nations in poverty traps. very high.
5. Prevalence of Mass Poverty - Low
Over 40% of the world’s population lives level of per capita income combined
on less than $2 per day, part of a with high degree of inequalities in its
condition of absolute poverty. distribution leads to widespread poverty
in underdeveloped countries.
Absolute Poverty 6. Low Levels of Productivity - this is
- a situation of being unable to mainly due to:
meet the minimum levels of a. inefficient workforce
income, food, clothing, b. Low work culture
healthcare, shelter, and other c. Low use of capita in the form of
essentials. machinery and equipment.
7. Low Rate of Capital Formation -
Subsistence Poverty The saving rate in an underdeveloped
- an economy in which production country is quite low and rate of capital
is mainly for personal formation is also very slow.
consumption and the standard of 8. Technological Backwardness - In
living yields little more than basic most of the sectors, an underdeveloped
necessities of life. economy
the techniques of production employed
are generally obsolete mainly due to low
saving rate.
9. High Level of Unemployment -
mainly due to lack of capital and low
level of development in various
economic sectors, these countries aren’t
able to absorb the rising labor supply.
10. Low Social Indicators of
Development - The under-developed
countries have very low social indicators
such as low literacy rate, high infant
mortality rate, low expectancy of life,
etc.