In order to attain a rapid economic growth, the rate of domestic savings and investment must be raised to 20 per cent. Planning is also essential for mobilisation of resources, capital formation and also to raise the volume of investment required for accelerating the pace of development. This will render the planning and implementation of forest development programmes more efficient and egalitarian, two points which are essential for the sustainability of development. Thus this dearth of critical skills and knowledge in these countries has resulted under-utilisation and mis-utilisation of physical capital leading to lower productivity and higher cost structure of the production system. Economic Development of Hawaii Hawaii, with an area of 28,313 sq. Before people didn’t really realize that they could run out of resources at some point, they thought it would be here indefinitely, and we have r… Due to such uncertainty, flight of capital in considerable proportion takes place from these countries to advanced countries and also retards the chances of flow of foreign capital to these countries through foreign direct investment. As A.G.B. Therefore, the transfer of population from agricultural sector to non-agricultural sector must be supported by an increase in agricultural production so as to provide necessary food and raw materials to the non-agricultural sector as well as to meet the requirement of increasing population in both of these sectors. Economic development is thus a process of raising the rate of capital formation, i.e. There may be three forms of technological advancement, i.e. Economic Development is a bigger concept than economic growth. Capital-output ratio is also considered as an important determinant of economic development in a country. Movements in structural transformations in economic growth can also be analysed in the form of changes in the distribution of labour force among three major sectors. Welcome to EconomicsDiscussion.net! (c) Utilisation of innovations on a large scale. Again, the long-term constraints include infrastructural bottlenecks, financial constraints etc. 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, lesser balance for investment and export, lesser capital formation, adverse balance of trade, increasing demand for social and economic infrastructural facilities and higher unemployment problem. Thus all these economic, political and social factors are equally responsible for the poor socio-economic set up of these underdeveloped countries and put serious obstacles for the path of economic development of these countries. These modes of living in most under-developed countries have had in the past little direct connection with economic development. (2) Propensity to apply science to economic ends. Thus, over-population results poverty, inefficiency, poor quality of population, lower productivity, low per capita income, unemployment and under-employment and finally leads the country toward under development. Prof. Gadgil also observed, “All attitudes, habits of mind, patterns of behaviour, are born out of chiefly historical institutional modes of living. Again, the modern economic growth has also paved the way for the emergence of joint stock companies and giant corporations in modern industrial set-up. Counter-productivity is the problem that will sooner or later hit every economy, to reduce the impacts it can have some measures need to be taken. Our mission is to provide an online platform to help students to discuss anything and everything about Economics. Inspite of having huge variety of natural resources, countries of Asia and Africa could not attain a higher level of development due to lack of its proper utilization. Foreign rulers converted these economies as primary producing countries engaged in the production of raw materials only to be supplied to the ruler country at cheaper prices and also a potent market for the sale of the manufacturing products produced by the ruler country. Share Your PDF File Inspite of their best attempt, the rate of savings of these underdeveloped countries remained very low, varying between 5 to 9 per cent only of their national income as compared to that of 15 to 22 per cent in the developed countries. In this connection, Prof. Schultz has rightly observed, “To achieve economic growth of major importance in such countries, it is necessary to allocate effort and capital to do three things: increase the quantity of reproducible goods, improve the quality of the people as productive agents and raise the level of productive arts.”. Accordingly, Kindleberger further observed, “Growth involves focussing on height or weight, while development draws attention to the change in functional capacity.”, Although some economists have observed slight differences between economic development and economic growth but all these differences are imaginary and unreal and thus have little practical value. This has forced the gross output of these countries for less than the potential output. The theory developed here is called the neoclassical theory of distribution. Cairncross has rightly observed that economic development “ is not just a matter of having plenty of money nor is it purely an economic phenomenon. Data is collected and stored in the Register of Legal Entities. Prof. W.A. Natural resources of the country can be properly exploited with manpower resources. Concept: Normative concept Narrower concept than economic development 13. With the advancement of technology, capital goods became more productive. Effective partnerships across society will help create a virtuous cycle of rising confidence, rising investment, higher employment and increased productivity and income. In order to formulate and implement economic planning along with a specific policy for economic growth, the government must be strong and efficient one, capable of maintaining internal law and order and defending the country against any external aggression. Their knowledge is extended, their imagination is stimulated, new desires are aroused, the propensity to consume is shifted upward.”. In the absence of public co-operation and participation, this development strategy cannot function properly. This type of political instability creates uncertainty about its future steps and adversely affects the economic decisions of these underdeveloped countries relating to its investment. All these social forces are obstructing the path of development of these underdeveloped countries. Prof. Simon Kuznets has rightly observed that during the period of modern economic growth, the share of agriculture and agro-based industries in aggregate output (GDP) has recorded a sharp decline, while the shares of manufacturing industries, public utilities and certain service groups like professional, government etc. According to McConnel, Brue and Flynn (2009) economic growth is ‘an outward shift in the production possibilities curve that results from an increase in resource supplies or quality or an improvement in technology’ or it’s ‘an increase in real GDP or … : The following conditions must be satisfied for attaining technological advancement in a country: (a) making provision for large investments in research. ... use our search form on bottom ↓ . Various developed countries like Japan have been able to attain higher rate of capital formation to trigger rapid economic growth. Introduction Economic systems are organized way in which a state or nation allocates its resources and apportions goods and services in the national community. Moreover, market created in the foreign country is also working as a useful stimulant for the expansion of both primary, secondary and tertiary sector of the country leading to its economic development. (a) An increase in the volume of real savings, (b) Establishment of proper credit and financial institutions for mobilising and channelising these savings into investible fund and. An economic system is slackly defined as country’s plan for its services, goods produced, and the exact … In this essay we will discuss about the Economic Development of a Country. Being a technologically backward country, India has decided to permit foreign direct investment in order to imbibe advanced technology for attaining international competitiveness under the present world trade and industrial scenario. Thus in order to accelerate the pace of economic development the government must make necessary arrangement for the maintenance of law and order, defence, justice, security in enjoyment in property, testamentary rights, assurance to continue business covenants and contracts, provision for standard weights and measures, currency and formulation of appropriate monetary and fiscal policies of the country. While reading this document, it is understood that the social benefits to the minimum wage increase is valuable for families, and it will profit this province as a whole. Demonstration effect on consumption level works as another major obstacles or constraints on the path of economic development of underdeveloped countries as it increases propensity to consume and thereby reduces the rate of savings and investment. Thus by the term economic development we mean a process so as to raise the per capita output with a scope for equitable distribution. But the same share recorded an absolute and relative increase in the countries like USA, Canada, Italy, Japan, Switzerland and erstwhile USSR. Removal of market imperfections can accelerate the pace of capital formation and can also widen the scope of capital and money market in these countries. In recent years, economic planning has been playing an important role in accelerating the pace of economic development in different countries. Economic development of a country also demands existence of a strong, honest, efficient and competent administrative machinery for the successful implementation of government policies and programmes for development. SOCIAL SCIENCE MODULE - 4 Socio-economic Development and Empowerment of Disadvantaged Groups Contemporary India: Issues and Goals 220 Notes 25 SOCIO-ECONOMIC. On the other hand, changes arising on the factor supply are also related to—capital accumulation, discovery of new resources, introduction of new and more efficient production techniques, increase in size of population and organisational changes. The objective criteria established therein are standard errors of projections vs.  the fact. But with the gradual growth of domestic savings in the subsequent years of development, the dependence on foreign capital must gradually be diminished. Economic development, being a dynamic concept refers to the continuous increase in production over the changing time path. Due to lack of adequate number of trained and skilled personnel, the production system remains thoroughly backward. Category C – Synthesizing Climate Change Mitigation with Development. Moreover, rapidly rising population necessitates a higher rate of investment to maintain old standard of living and per capita income. 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