Economic Growth

and Development
MLS 2B Group 8
Baldevieso, Balagosa, Langreo, Lusaya, Sotiar,
Lao

Economic Development
Is an increase in living standards,
improvement in self-esteem needs and
freedom from oppression as well as a
greater choice.
Referred to as the quantitative and
qualitative changes in an existing economy.
The most accurate method of measuring
development is theHuman Development
Indexwhich takes into account the literacy
rates & life expectancy

Difference Between Economic

and Development
Economic Development

Economic development
implies changes in income,
savings and investment along
with progressive changes in
Implications
socio-economic structure of
country (institutional and
technological changes).
Qualitative.HDI (Human
Development Index), genderMeasurement related index (GDI), Human
poverty index (HPI), infant
mortality, literacy rate etc.

Economic Growth
Economic growth
refers to an increase in
the real output of
goods and services in
the country.

Quantitative.
Increases in real GDP.

Economic Development
Brings qualitative and
Effect quantitative changes in the
economy
Economic development is
more relevant to measure
progress and quality of life in
developing nations.
Relevance

Concerned with structural

Scope changes in the economy

Economic Growth
Brings quantitative
changes in the
economy
Economic growth is a
more relevant metric
for progress in
developed countries.
But it's widely used in
all countries because
growth is a necessary
condition for
development.
Growth is concerned
with increase in the
economy's output

Stages of Economic
Growth and
Development

Economic Growth
Is an increase in a country's real level of
national output which can be caused by an
increase in the quality of resources
(byeducationetc.), increase in the quantity
of resources & improvements
intechnologyor in another way anincrease
in the value of goods and services produced
by every sector of the economy.
It can be measured by an increase in a
country'sGDP (gross domestic product).

2.) Pre-conditions:
-Development of
mining industries
-Increase in capital
use in agriculture
-Necessity of external
funding
-Some growth in
savings and
investment

1.) Traditional Society

-subsistence
economy
-output not traded or
recorded
-existence of barter
-high levels of
agriculture and labor
intensive agriculture

3. ) Take of
-Increasing
industrialization
-Further growth in
savings and
investment
-Some regional
growth
-Number employed in
agriculture declines

Rostows Model

In 1960, the American Economic Historian,

W.W. Rostow suggested that countries
must pass through 5 stages to become
developed.

4. )Drive to Maturity
-Growth becomes
self-sustaining
-Wealth generation
enables further
investment in value
adding industry and
development
-Industry more
diversified
-Increase in levels of
technology utilized

5.) High mass

consumption
-High output levels
-Mass
consumption of
consumer
durables
-High proportion of
employment in
service sector

Market Based

Development is determined by
the extent to which the market
is able to allocate resources
The price signal acts to allocate
scarce resources
Governments limit interference
in the working of the economy
Government role is to
encourage enterprise and to
reduce regulation and
inefficiencies in free markets
and establish ownership of
property rights

Formula to
Compute
Economic Growth

Gross Domestic Product (GDP) is an estimated value of the total

worth of a countrys production and services, within its boundary,
by its nationals and foreigners, calculated over the course on one
year.

Gross National Product (GNP) is an estimated value of the total

worth of production and services, by citizens of a country, on its
land or on foreign land, calculated over the course on one year.

GNP = GDP + NR NP
Or

GNP= GDP + Net factor income from

abroad
GNP= Gross National Products
GDP= Gross Domestic Product
NR= Net income inflow from assets abroad or Net Income
Receipts
NP= Net payment outflow to foreign assets

Methods Used to Assess

Economic Development

Human Development Index

(HDI)

A tool developed by the United Nations to

measure and rank countries' levels of social
and economic development based on:

Longevity,measured by life expectancy at birth

Knowledge,measured by adult literacy and
number of years children areenrolled atschool
Standard of living,measured by real GDP
percapita

20

A scale from 0 (lowest human development)

to 1 (highest human development).

An index of 0 0.49 meanslow

development
An index of 0.5 0.69 meansmedium
development
An index of 0.7 to 0.79 meanshigh
development
Above 0.8 means veryhigh development

21

Inequality-adjusted Human
Development Index (IHDI)
adjusts the Human Development Index
(HDI) for inequality in the distribution of
each dimension across the population.
IHDI accounts for inequalities in HDI
dimensions by discounting each
dimensions average value according to its
level of inequality.

The IHDI equals the HDI when there is no

inequality across people but falls below the
HDI as inequality rises. In this sense, the
IHDI is the level of human development
when inequality is accounted for

Gender Inequality Index

(GII)

reflects womens disadvantage in three

dimensions:

reproductive health
empowerment
labor market

The index shows the loss in human

development due to inequality between
female and male achievements in these
dimensions. It ranges from 0, which
indicates that women and men fare equally,
to 1, which indicates that women fare as
poorly as possible in all measured
dimensions.

Multidimensional Poverty
Index (MPI)

identifies multiple deprivations at the

household level in education, health and
standard of living.
complements monetary measures of poverty
by considering overlapping deprivations
sufered by people at the same time.

index identifies deprivations across the same

three dimensions as the HDI and shows the
number of people who are multidimensionally poor and the number of
deprivations with which poor households
typically contend with.
It can be deconstructed by region, ethnicity
and other groupings as well as by dimension,
making it an apt tool for policymakers.

Issues and Problems

of Economic Growth

 Lifestyle

Losses
Generational Transfers
Population
Consumption
Garbage
Pollution

Congestion
Natural resource depletion
Corruption
Economic Growth is unstable
Environmental problems

Low Inflation
Cheap imports
Growing export market
Financial surplus
Depletion of the global resource base and
the impact of global warming.

Huge expansion of waste and

pollution
Over population
Species extinction leading to a
loss of bio-diversity.

List of Countries
According to Economic
Growth

WORLD

ASIA

Top 10 Richest
Countries in the
World
(based on GDP per Capita)

10. Netherlands

GDP (PPP) per

capita: $40,973

http://www.forbes.com/pictures/egim45e

9. Switzerland

GDP (PPP) per capita:

$41,950

http://www.forbes.com/pictures/egim45

8. Hong Kong

GDP (PPP) per capita: $45,944

http://www.forbes.com/pictures/egim45

7. United States of
America

GDP (PPP) per

capita: $46,860

http://www.forbes.com/pictures/egim45

6. United Arab Emirates

GDP (PPP) per

capita: $47,439

http://www.forbes.com/pictures/egim4
5egde/6-united-arab-emirates/

5. Brunei

GDP (PPP) per capita:

$48,333

http://www.forbes.com/pictures/egim4

4. Norway

GDP (PPP) per capita:

$51,959

http://www.forbes.com/pictures/egim4

3. Singapore

GDP (PPP) per

capita: $56,694

http://www.forbes.com/pictures/egim45

2. Luxembourg

GDP (PPP) per capita: $81,466

http://www.forbes.com/pictures/egim45e

1. Qatar

GDP (PPP) per capita:

$88,222

http://www.forbes.com/pictures/egim4

Top 10 Poorest
Countries in
2014
(based on GDP per capita)

https://www.gfmag.com/globaldata/economic-data/the-poorest-

http://www.gov.ph/repor

Human
Development
Index around the
world

Human
Development
Index in the
Philippines

http://hdr.undp.org/sites/all/themes/h
dr_theme/country-notes/PHL.pdf

http://www.manilatimes.net/70th-117th-saga