| ECONOMIC
DEVELOPMENT
Economic Development is a branch of economics that
deals with the study of macroeconomic causes of long term economic
growth, and microeconomics; the incentive issues of individual households
and firms, especially in developing countries. This may involve
using mathematical methods from dynamical systems like differential
equations and inter-temporal optimization, or it may involve a mixture
of quantitative and qualitative methods.
Development is a phenomenon which occurs over a long period of time
but economic growth is increase in GNP which can
occur when we are able to achieve increase in number of resources
or increase in technology or by the combination of both.
Freidman defines growth as an expansion of the system in one or
more dimensions without a change in its structure and development
as an innovative process leading to the structural transformation
of social systems.
Thus Economic growth is related to a quantitative
sustained increase in the country’s per capita output or income
accompanied by expansion in its labor force, consumption capital
and volume of trade. On the other hand economic wants goods incentives
and institutions.
MEASUREMENT OF ECONOMIC DEVELOPMENT
Apart from measuring income with the help of per capita GNP we have
one more method to calculate Economic development.
It is HDI.
HDI does not replace GNP but adds considerably to an understanding
of the real position of as society in many respect as would be clear
from the following discussion
1. Besides Y the HDI measures education and health and is thus multi
dimensional rather than One Dimensional
2. It focuses the attention of the policy makers on the ultimate
objective of development not just the means
3. It is more meaningful as a rational average than GNP because
there are much greater extremes in Y distribution than in the distribution
of life expectancy and literacy.
4. It shows that Human development gaps between nations are more
manageable than the ever widening disparities in incomeThe search
for a comprehensive measure that could capture the various dimensions
of human development led to the definition and formulation of Human
Development Index by the United Nations Development programme in
human dev report published in 1990.
HDI is composite of 3 basic indicators of human development–
longevity, knowledge and standard of living.
Longevity is measured by life expectancy at birth; knowledge by
a combination of adult literacy and combined primary and secondary
and tertiary enroll. Ratios and standard of living is measured by
real GDP per capita.
INDEX=
Actual value – minimum value
Max.
Value – Min. value
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