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np Economics - XI
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Economic Development
Meaning of Economic Development:
Economic development is a changing concept. Therefore, there is no accurate and
universally acceptable definition of economic development. In past, the increase in gross
national product (GNP) was regarded as the main indicator of economic development.
But there is change in this view in recent years.
According to Gunar Mydral: Economic development means upward movement
of the entire social system.
According to Arthur Lewis: Economic development means the increase in per
capita production.
According to World Bank: Economic development is defined as a sustainable
increase in living standard that encompasses material consumption, education, health and
environmental protection.
Therefore, Economic development means not only increase in per capita income
but it also means the alleviation of poverty, reduction in economic inequality and
provision of social services like education, health and environmental protection.

Indicators of Economic development:
There is difference of opinions among the economists regarding the indicators of
economic development. Economic development is the result of long term changes. The
commonly known indicators of economic development are as follows:

I. Increase in per capita income:
Per capita income is the first and most important indicator of economic
development. Therefore, per capita income should be increased for the economic
development of nation.

II. Increase in standard of living:
Another indicator of economic development is living standard of common
people. Thus, standard of living of common people should increase for economic
development because the main objective of economic development is to provide
better life to people.

III. Physical Quality of Life Index(PQLI):
This is another indicator of economic development. The physical quality
of life index (PQLI) is the composite of three indexes like life expectancy, literacy
and infant mortality rate. The value of PQLI ranges from 1 to 100. If the value of
PQLI is more than 50, the country is supposed to be developed and if the value is
less than 50, the country is supposed to be developing.

IV. Basic Needs Criterion:
This criterion was developed by Word Bank. According to this criterion
the economic development is evaluated on the basis of the fulfillment of basic
needs of population. Here, the basic needs of people are education, health care
facility, sanitation, drinking water, nutrition, housing and other related
infrastructures.

V. Human Development Index(HDI):
This is the most recent indicator of economic development. This indicator
was introduced by UNDP. It measures the development in terms of peoples
income level, health, education, environment and gender issues. It is a composite
index ranges 0 to 1. If the value HDI is less than 0.5, it indicates low human
development and if it is more than 0.5, it indicates high human development.
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Characteristics of Developing Countries:
Those countries where the process of economic development has started but not
completed are called developing or underdeveloped countries. In such countries there is
low rate of economic growth and high rate of population growth. Similarly, there is no
proper use of natural resources and human resources in these countries. The major
characteristics of developing countries are as follows:

1. General Poverty:
Developing countries are poor. There is mass poverty in these countries.
The per capita income is very low in these countries. The majority of people live
below poverty line. The disease and hunger can be found wide spread in this
countries. Therefore, a majority of people in developing countries are born in
poverty and die in poverty.

2. High Dependence in Agriculture:
Agriculture is the main occupation in developing countries. Majority of
people depends directly or indirectly on agriculture. Majority of people live in
rural areas in these countries.

3. High Population growth rate:
There is serious population problem in developing countries. The growth
rate of population is very high in these countries. The ratio of dependent
population is high. There is high density of population. The pressure of population
on land is very high. The birth rate and death rate are both high and life
expectancy is very low in these countries.

4. Under utilized natural resources:
Most of the developing countries are rich in natural resources. But these
resources have not been properly exploited due to the lack of capital, technology
and infrastructure.

5. Low level of productivity:
Most of the developing countries are technologically backward. Therefore,
there is low productivity in these countries.

6. Low level of Investment:
There is shortage of capital in developing countries. The available stock of
capital is less than the need of economic development. The capital formation is
very low due to low level of saving and investment.

7. Lack of basic infrastructures:
There is lack of basic infrastructures in developing countries like
transport, communication, electricity, canals, banks, financial institution, etc. No
nation can develop without these facilities.

8. Dualistic economy:
Most of the developing countries have dualistic economy. There is market
economy in urban areas and subsistence economy in rural areas.