Economic Development Concepts Overview

Principles and Concepts of Development

• Economic development is defined as programs, policies, or activities that improve the economic well-being and quality of life in a community.
• It's a process of targeted activities and programs that build local wealth, diversify the economy, create and retain jobs, and bolster the local tax base.
• Economic development strategies often focus on creating more jobs, improving the quality of life, encouraging more businesses to pay taxes, and promoting community assets.

Topic Highlights

• The study covers various aspects like Economic Development, Measures of Economic Development, Classification of Rich and Poor Countries, Basic Needs Attainment, Growth and Basic Needs, Basic Needs as a Human Right, and Cost and Benefit of Economic Development.

Measures of Economic Development

• R. G. Lipsey emphasizes multiple possible measures of a country's development level, including income per capita, the percentage of unexploited resources, capital per capita, savings per capita, and the amount of social capital.
• More common criteria include increases in national income, per capita real income, comparative standards of living, and overall community economic welfare.

National Income as an Index of Development

• Certain economists believe national income growth is the most suitable indicator of economic development.
• Simon Kuznets, Meier and Baldwin, Hicks D. Samuelson, and Pigon and Kuznets are mentioned in this context.
• Prof. Meier and Baldwin suggest per capita income increase as the measure of economic development.

Per Capita Real Income

• Economic development is often measured by increases in real per capita income over a long period.
• Harvey Leibenstein, Rostow, Baran, Buchanan, and others use per capita output as an index of economic development.
• Charles P. Kindleberger proposes similar metrics with careful computations for national income data.

Economic Welfare as an Index of Development

• Suggested as a measure of economic development, various economists propose this idea, including Coline Clark, Kindleberger, D. Bright Singh, and Hersick.

Economic Welfare Considerations

• Economic welfare can be understood in two ways:
  • Equal distribution of national income across all societal sections.
  • Increased purchasing power of money, even with rising prices. This suggests that price stability alongside income growth is important.
• Economic welfare directly correlates with the extent of economic development.

Comparative Concept

• The comparative concept helps assess the level of economic development in a country.
• Comparisons are made within the country and with other countries.

Measurement Through Occupational Pattern

• Changes in occupational structure are crucial for evaluating economic development.
• Colin Clark highlights a strong relationship between occupational structure and economic development.

Occupational Structure

• The occupational structure includes distinct sectors:
  • Primary sector: Agriculture, fisheries, forestry, and mining.
  • Secondary sector: Manufacturing, trade, and construction.
  • Tertiary sector: Services, banking, and transportation.
• In underdeveloped countries, the primary sector usually employs most of the workforce.

Standard of Living

• A criterion of economic development is an increase in average consumption levels among individuals.
• Another measure is the Human Development Index (HDI).

Human Development Index (HDI)

• The Physical Quality of Life Index (PQLI) combines infant mortality, life expectancy at age one, and basic literacy at age 15 to assess basic needs fulfillment.
• The Human Development Index (HDI), developed by the United Nations Development Programme (UNDP), assesses a broader range of factors.
• The HDI uses a scale of zero to 100 for each component, and averages the values for the overall rating.