conclusion on economic development

Thus to bring social and institutional change as per changing environment and to realise the modern values of life are very much important for accelerating the pace of economic development in a country. Burkhart and Lewis-Beck (1994) test whether economic development causes economic development. 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. Moreover, the rapid change in the size and form of business organisations has also resulted a major structural change in the economy. Problems within the sector therefore need to be addressed in an integrated and all-encompassing way, by taking into account socio-economic considerations as well as legal, institutional and financial framework conditions. Savings and investment patterns are considerably influenced by cultural and social considerations. The suitable investment criteria should maximise the social marginal productivity and also make a balance between labour intensive and capital intensive techniques. 7 Conclusion. Regarding the determinants of economic growth, Prof. Ragnar Nurkse observed that “Economic development has much to do with human endowments, social attitude, political conditions and historical accidents.”. Firstly, the productive opportunities available within the existing resouirce and necessary known-how have to be utilised to the maximum extent through optimum allocation of the resources of the country. So, education plays pioneer role for the creation of human capital and social progress which in turn determines the progress of the country.”. 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. Thus to achieve a higher rate of growth of national income, the country will have to take the following two steps: (b) to generate necessary forces for reducing capital-output ratio. 3. Secondly, the production frontier, i.e., the various productive sectors, has to be widened through sizable changes to the maximum extent. Underdeveloped countries like India usually face this type of problem. 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 … Again, the long-term constraints include infrastructural bottlenecks, financial constraints etc. Setting a dynamic economy in a static social set up is almost impossible as they cannot pull together. Inefficient and underdeveloped human resources are also considered another major obstacle towards economic development of underdeveloped countries. The country should arrange cheap and larger volume of credit facilities readily available for its industrialists, cultivators, businessmen, small traders and new entrepreneurs. ... technical and economic aspects of forestry development. Growing concentration of income and wealth in the hands of few and political influence generally protects the richer section from higher rates of taxation and thereby the tax burden ultimately falls much on the middle class and poorer sections of the society. Economic Development of Hawaii Hawaii, with an area of 28,313 sq. The size of the UW System economic impact can be reported in terms of its proportion of the entire amount of economic activity in Wisconsin. There were certain disequalising forces operating in the world economy which made the gains from trade go mainly to developed countries. The increase in the volume of capital formation leads to capital accumulation. Content Guidelines 2. A SUMMARY OF THE ANALYSIS Thus necessary change in the social structure is very important for attaining economic development in a country. (3) Propensity to initiate technical innovations, All these propensities are showing a clear-cut picture of determinants of economic growth neglecting the non-economic factors totally. 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.”. Reproduction and quotation are authorised provided the source is acknowledged. 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. In this essay we will discuss about the Economic Development of a Country. put severe obstacle on the path of economic development and also retards its pace. Basis Economic Development Economic Growth Effect: Brings qualitative and quantitative changes in the economy Brings quantitative changes in the economy Relevance: Economic development is more relevant to measure progress and quality of life in developing nations. (c) international economic co-operation in the form of increasing flow of foreign aid from advanced countries like U.S.A., Japan etc. While analysing the determinants of economic growth, Prof. J.J. Spengler and W.W. Rostow have made sincere attempts in this regard. But the capital output ratio in a country is also determined by stage of economic development reached and the judicial mix of investment pattern. For 2017, the value of all goods and services produced by Wisconsin workers was $313 billion. c. Changes in Social and Institutional Factors: Conservative and rigid social and institutional set up like joint family system, caste system, traditional values of life, irrational behaviour etc. In this connection, Prof. H.W. In order to attain economic development in an underdeveloped economy, capital formation is considered as an important pre-requisite for development. conclusion In competitive markets, workers earn a wage equal to the value of their marginal contribution to the production of goods and services. CONCLUSION. Due to lack of adequate number of trained and skilled personnel, the production system remains thoroughly backward. If the countries are rich in natural resources and adopted modern technology for its utilization, then they can attain higher level of development at a quicker pace. This chapter explained how labor, land, and capital are compensated for the roles they play in the ‘Production process. Thus in order to attain economic growth, raising the level of investment alone is not sufficient rather it is also equally important to gradually transform outdated social, religious and political institution which put hindrances in the path of economic progress. Stability, peace, protection from external aggression and legal protection generally raises morality, initiative and entrepreneurship. Pre-Requisites or Need 5. Prof. Raul Prebisch, Singer, Myrdal have formulated it “Theory of exploitation of poor countries”. Another important obstacles or constraints to the path of development of underdeveloped countries are its inefficient agricultural structure. While development policies and strategies tend to focus on physical capital, recent years has seen a better balance by including human capital issues. An economic system is slackly defined as country’s plan for its services, goods produced, and the exact … Lewis observed, “Popular enthusiasm is both the lubricating oil of planning and the petrol of economic development—a dynamic force that makes all things possible.”. In this connection, Meir and Baldwin aptly observed, “New wants, new motivations, new ways of production, new institutions are to be created if national income is to rise more rapidly. According to the neoclassical theory, the amount paid to each factor of production depends on the supply and demand , for that factor. Underdeveloped countries like India are facing serious obstacles due to inadequate infrastructural facilities. Existence of a stable strong, efficient and honest government machinery is considered another pre-requisite for economic development. In this light, the interconnection between nations is a vital aspect boosting economic development. Underdeveloped countries are also suffering from lack of adequate number of entrepreneurial ability. The Procedure was prepared in implementation of Government of the Republic of Lithuania Resolution No 1460 of 5 December 2012 and the provisions of the Republic of Lithuania Law on the Budget Structure (paragraph 5 of Article 37). This has forced the gross output of these countries for less than the potential output. Here the consumption level of individual is very much influenced by the standard of living or consumption habits of his neighbours, friends and relatives but not by its income alone. (a) Use of technological progress far economic gains, (b) Application of applied sciences resulting in innovations and inventions and. Suppose the country is producing only two commodities A and B. 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. Thus following are some of the important non-economic factors determining the pace of economic development in a country: It is the mental urge for development of the people in general that is playing an important determinant for initiating and accelerating the process of economic development. Moreover, the shift away from agriculture to non-agricultural activities has also resulted a significant fall in the share of small business units. Low productivity results in low level of income and low rate of savings leading to low rate of investment, which is again responsible for low rate of productivity. Attainment of economic development in a country is very much related to social attitudes, political conditions, human resources, and also very much depending on psychological, social culture and political requirements of the country itself. Economic development of a country does not simply require removal of some of its basic obstacles like market imperfections, capital shortage, various circle of poverty etc. Agricultural sector in these countries are suffering from primitive agricultural practices, lack of adequate inputs like fertilisers, HYV seeds and irrigation facilities, uneconomic holdings, defective land tenure and excessive dependence on agriculture. Another pre-requisite for economic development is to raise the capital absorption capacity of underdeveloped countries as they mostly suffer from lack of such capacity due to non-availability of co-operant factors. Growing population increases the volume of consumption expenditure and thereby fails to increase the rate of savings and investment, so important for attaining higher level of economic growth. Prof. Meier has rightly said, “We shall define economic development as the process whereby per capita income of a country increases over a long period of time.” Here the word “process” indicates long period changes related to changes in demand side as well as changes in factor supply. These vicious circles of poverty are mutually aggravating and it is really difficult to break such circles. have recorded a manifold increase. Lewis, there are three principal causes of economic development. Economic Development is a bigger concept than economic growth. Countries like former U.S.S.R. and even U.S.A. and West Germany have achieved a rapid development through the adoption of economic planning. The share of total labour force engaged in industrial sector varied between 40 to 58 per cent for almost all the countries excepting erstwhile USSR and Japan, as these countries entered lately in the field of industrialisation. In this respect population is working both as a stimulant as well as hurdles to economic growth. The path of economic development in an underdeveloped economy is full of hurdles or impediments. Therefore, planners should make an endeavour to enlist public co-operation and to arouse popular enthusiasm for implementing their plan for development. Thus in order to attain a higher rate of development, the underdeveloped countries should adapt only that type of technology which can suit their requirements. Introduction Economic systems are organized way in which a state or nation allocates its resources and apportions goods and services in the national community. 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. Most of the underdeveloped countries are facing the problem of political instability resulting from frequent change of government, threats of external aggression and disturbed internal law and order conditions. Mere possession of natural resources cannot work as a determinant of economic development. But the actual production curve of the underdeveloped country denoted by AB lies much below the potential production curve AB due to market imperfections resulting in misallocation and under-utilisation of resources in the country. Market imperfection is largely responsible for wide spread poverty in such economies. Without the aforementioned cookies the website cannot function properly. T.W. In order to attain economic development proper social and political climate must be provided. These resources allow the nation to present itself as a competitor among others. Obstacles or Constraints 4. (2) Propensity to apply science to economic ends. 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. Vicious circle of poverty is considered as one of the major constraints or obstacles to the path of economic development of the underdeveloped countries. Formulation of proper monetary and fiscal policy by an efficient government can provide necessary climate for increased investment and also can stimulate capital formation in the country. Effective partnerships across society will help create a virtuous cycle of rising confidence, rising investment, higher employment and increased productivity and income. Here the idea is not only to determine the rate of investment but also the composition of investment. Instead it diminishes the rate of accumulation, raises costs in extractive industries, increases the amount of disguised unemployment and in large parts simply diverts capital to maintaining children who die before reaching a productive age. 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. A whole hearted effort should be made to utilise its available limited resources in a most efficient and dynamic manner to its maximum extent. The key to development lies in men’s minds, in the institution in which their thinking finds expression and in the play of opportunity on ideas and institution.”, Again Prof. Macord Wright writes, “The fundamental factors making economic growth are non-economic and non-materialistic in character. Before publishing your Articles on this site, please read the following pages: 1. In order to meet such requirement, there should be sufficient transformation in the agricultural sector in the form of introduction of land reform measures, raising the supply of productive inputs or factors in agriculture, promoting new credit institutions, introducing dynamic market structure, providing additional incentives, arranging changes in socio-economic relationships, introducing intensive cultivation process. Thus this poor performance of agricultural sector is another major obstacle in the path of economic development of these underdeveloped countries. Data is collected and stored in the Register of Legal Entities. We apologise for the inconvenience. Prof. A.K. These Constraints on the path of economic development are of two types: These short-term constraints are related to over concentration and stagnation in agricultural sector, unemployment and under-employment, low productivity of capital, the growing deficit in its balance of payment position etc. As A.G.B. Economic development, being a dynamic concept refers to the continuous increase in production over the changing time path. Thus in conclusion it can be observed that availability of natural resources and its proper utilization is still working as an important determinant of economic growth. Jacob Viner stated in this connection, “Population growth in a backward country does not induce capital widening investment or innovation. The process of growth is connected with both fuller use of existing resources and expanding resources. Again Mrs. U.K. Hicks opined, “Economic Development deals with the problem of underdeveloped countries whereas ‘Economic Growth’ deals with the problem of developed countries. At the same time the existing poor technology of these underdeveloped countries fails to raise the rate of productivity and also to bring them out of the vicious circle of poverty and thereby makes it uncompetitive. LEI code 529900F7Y171QF1RSU09. Economic development is considered as an important strategy for building various social and economic overhead infrastructural facilities along with the development of both agricultural, industrial and services sectors in a balanced manner. Economic development is considered as an important strategy for building various social and economic overhead infrastructural facilities along with the development of both agricultural, industrial and services sectors in a balanced manner. The following are some of the important obstacles or constraints on the path of economic development of underdeveloped countries: In the initial part of their development process, most of the underdeveloped countries were under foreign domination which had led to the huge colonial exploitation by the foreign rulers. We have presented an enormous amount of information throughout this book that may appear overwhelming. Economic factors alone are not sufficient for determining the process of economic development in a country. 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. (b) ability to realise the possibilities of using scientific inventions and innovations for commercial purposes and expansion and diversification of the market for its product. Essay # 1. Moreover, weak and corrupt public administration in these countries has been resulting a huge leakage of public fund meant for investment in developmental activities. Moreover, rapidly rising population necessitates a higher rate of investment to maintain old standard of living and per capita income. Sustainability of the development, which is always bearing in mind that every action can cause a reaction, and efficient use of resources would be a beneficial for future generations. In these countries, the rate of savings is low due to low per capita income and higher marginal propensity to consume. Thus to attain a high rate of economic development, inter-sectoral transfer of work force is very much necessary. Natural Resources and its Utilization: Availability of natural resources and its proper utilization are considered as an important determinant of economic development. 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