Critical essay on under developed, growth and development
The rays of development have not flourish with same magnitude throughout the world. In some countries it has just reached and some countries are already covered by it. To understand the underdevelopment, growth and development, it is necessary to study economic in historical perspectives. The underdevelopment is the situation in which level of living is extremely low due to the low level of per capita income resulting from low level of productivity and higher rate of population growth. The economic growth is the outwards shift of Production Possibility Curve (PPC). The economic growth can be measured by the increase in the country’s total output or Gross Domestic Product (GDP) or Gross National Product (GNP). The story of the growth can help us to understand the improvement in the basic needs like foods, clothing, health and literacy, and widen human choice to enable people to control their environment. Economic development include economic growth as well as some qualitative change like increase in welfare, increase in income per capita, increase in level of literacy and sanitation facilities. At the initial stage of industrialization the globe itself is underdeveloped and development in human knowledge and exploration for different reason by human leads to the improvement in trade and commerce which leads to the advancement in science and technology. The growth and advancement of industrialization had shifted the Production Possibility Curve of the country outward and boosted the growth. Hence, this essay basically talks on underdevelopment, growth and development CITATION Mic041 \l 1033 (Todaro & Smith, 2004).
According to Eugene Staley, underdeveloped economy are the economy which has mass poverty which is chronic and not the result of temporary misfortune, obsolete method of production and distribution, which means poverty is not due to poor natural resources and low capacity of the country but it is due to the lack of proper organization and coordination by the government. Moreover, the group of experts from United Nation States said that underdeveloped countries are those countries having low real per capita income when compared with the real per capita income of the USA, Canada, Australia and western European countries. It fails to create satisfactory level of living standard to the people though it has the potential of growth, but its unsuitable feature hinders its growth. Some of the common features of the underdeveloped economy are low per capita income, slow growth rate of per capita income, economic inequalities, low level of living, low rate of capital formation, backward techniques of production, high growth rate of population and dependency burden, low productivity of labour, underutilization of natural resources, large scale unemployment, dominance of agriculture, high incidence of poverty, infrastructural backwardness, low volume of foreign trade. However, underdevelopment is the relative concept because it the compression of quality of life between the economics that differentiates them in underdeveloped and developed. Moreover, underdevelopment sustains absolute poverty. Absolute poverty is the situation in which people fail to meet their basic needs of food, clothes and shelter. Thus, underdevelopment and absolute poverty go together or underdevelopment sustains absolute poverty.
Economic growth is an increase in production of goods and services of the country compared to the previous year. The economic growth can be considered as a path way to the economic development. Economic growth occurs when there is an increase in number of people in workforce or quality of workforce improves. For example, training and education improves the quality of workforce. Also when there is an increase in capital and machinery, improvement of technology. In the short run economic growth is caused by an increase in aggregate demand (AD). If there is spare capacity in the economy than an increase in AD will cause higher level of real Gross Domestic Product (GDP). Aggregate demand change with the influence of factors such as;
Low interest rates; lower interest rate reduce the cost of borrowing and encourages consumer spending and firms to invest. Lower interest rate also mortgage payment and increases the disposable income of the people.
Increase government spending (G); when government increase investment on building new roads or increase spending on welfare scheme. Money in circulation will increase and people’s income will rise.
Increased wages; higher real wage increases the disposable income of the consumer which boost the spending of the people.
Devaluation; A fall in the value of export rate make export cheaper and improves the quantity of exports but this can happen only in the country with large volume of export goods. Depreciation also makes import more expensive, reducing the quality of import and making domestic goods more relatively attractive.
The constant growth of countries real GDP and low level of unemployment will translate to economic development. In 1929, Argentina, dominated the world economy for being giant in automobile production which raise her GDP and consequently increases the standard of living. But today Argentina is considered as developing countries because of her poor economic development policy which leads to the poor performance of the economy. The government of the county can adopt sophisticated infrastructure which boost the interest of the businessman to incur large scale investment. Moreover, government needs to focus on development of the infrastructure like roads, bridges, ports and sewer system which has a dual impact, easy accessibility to this facility boost the interest of entrepreneur to expand their size of business as well as creates employment opportunities. The economist favoring the spending on infrastructure as a economic catalyst argue that having top- notch infrastructure increases productivity by enabling business to operate as effectively as possible CITATION Mis86 \l 1033 (Misra & Puri, 1986).
Additionally, spending on infrastructure creates more jobs opportunity as more worker is needed to complete the targeted project. It is also capable of spawning new economic growth. For example, the construction of new highway might leads to the other investments such as gas station, automobile workshop, and general shops and retail stores. Economic growth is also driven by the consumers spending and business investment. The companies that invest in new technology and manufacturing plants will be able to create jobs opportunity. Thus, companies hair more workers and proportion of people earning wages and salaries increase, so the quantity demand will rise due to the change in people’s income level. Also wages and salaries will rise due to the improvement in the output with new methods of production. Also some countries have designed tax cuts and tax rebates to put more money in the hands of consumers CITATION Uke08 \l 1033 (essay, 2108). With the view that, those consumer spends this money in various businesses, which increases business revenue, cash flow and profits. With more cash, companies will be able to improve technology, grow and expand the business. All this methods will increase the production of the companies and leads to the outward shift of the Production Possibility Curve (PPC).
The economic development is a multi- dimensional phenomenon because it not only focuses on income of the people but also in the improvement in the living standard of the people. In the sense, that economic development take into consideration all the social, cultural and economic wellbeing for the development of the country. Economic development is a process of where low income national economics are transformed into modern industrial economics. It involves qualitative and quantitative improvement in a country’s economy. Political and social transformations are also taken into consideration by economic development.
Charles P. Kindleberger and Bruce Herrick (1958) point out; “Economic development is improvement in material welfare especially for the person with the lowest income, the eradication of mass poverty with its correlates of illiteracy, disease and early death, changes in the composition of inputs and outputs that generally includes shifts in the underlying structure of the production away from agriculture towards industrial activities, the organization of the economy in such a way that productive employment is generally among working age population rather than the situation of a privileged minority, and the corresponding, greater participation of broad based groups in making decision about the direction, economic and otherwise, in which they should move their welfare” CITATION Cha58 \l 1033 (Kindleberger & Herrick, 1958).
The economic development implies both increases in the quantity of output as well as improvement in the quality of output. Also there is a change in technical and institutional arrangement by it is produced and distributed. However economic growth implies that increase in the amount of goods and services produced in the economy compared to the previous year irrespective of technological progress and quality of goods and services produced. So, all types of growth are not good for the nation only inclusive and substantial growths are important because they help to reduce poverty. Hence, economic development can be considered as more inclusive and precise method which operates in long run, whereas economic growth is exclusive process as compare to economic development and it operate in short run. However, economic growth is path way to the economic development (John, 2001).
The economic development includes all the stages of economic transformation from underdeveloped to Development. The stages of economic transformation are underdevelopment followed by growth and finally development. In the way underdevelopment and development are connected by growth. The sustainability and the development are the significant factors which every economist most need to take into consideration for of present as well as future generation. The proper planning and coordination of resource utilization will leads to the sustainable growth of the nation. Thus, effective utilization of resources with knowledgeable and skilled manpower leads to the growth and development. Therefore, an economic development is more inclusive and long run approach and also it is multidimensional concept. Finally, economic growth is necessary condition to transform the underdeveloped economy to developed economy but it is not sufficient condition.
Bibliography
BIBLIOGRAPHY Essay, U. (2108). Essay on Economic Growth and Development. Retrieved from Economicsdiscussion: https;//www.ukessays.com/essays/economics/economic- growth.php?vers=1
John, B. P. (2001). The Regional Dimensions of Rostow's Theory of Growth. The journal on Development theoris , 3.
Kindleberger, C. P., & Herrick, B. (1958). Concept oF Economic DEvelopment .
Misra, S., & Puri, V. (1986). Economics of Development and Plannaing. Mumbai: Hinalaya Pub;ishing House Pvt.Ltd.,.
Todaro, M. P., & Smith, S. C. (2004). Economic Development . Delhi : Person Education (Singapor) Pet.Ltd.
The rays of development have not flourish with same magnitude throughout the world. In some countries it has just reached and some countries are already covered by it. To understand the underdevelopment, growth and development, it is necessary to study economic in historical perspectives. The underdevelopment is the situation in which level of living is extremely low due to the low level of per capita income resulting from low level of productivity and higher rate of population growth. The economic growth is the outwards shift of Production Possibility Curve (PPC). The economic growth can be measured by the increase in the country’s total output or Gross Domestic Product (GDP) or Gross National Product (GNP). The story of the growth can help us to understand the improvement in the basic needs like foods, clothing, health and literacy, and widen human choice to enable people to control their environment. Economic development include economic growth as well as some qualitative change like increase in welfare, increase in income per capita, increase in level of literacy and sanitation facilities. At the initial stage of industrialization the globe itself is underdeveloped and development in human knowledge and exploration for different reason by human leads to the improvement in trade and commerce which leads to the advancement in science and technology. The growth and advancement of industrialization had shifted the Production Possibility Curve of the country outward and boosted the growth. Hence, this essay basically talks on underdevelopment, growth and development CITATION Mic041 \l 1033 (Todaro & Smith, 2004).
According to Eugene Staley, underdeveloped economy are the economy which has mass poverty which is chronic and not the result of temporary misfortune, obsolete method of production and distribution, which means poverty is not due to poor natural resources and low capacity of the country but it is due to the lack of proper organization and coordination by the government. Moreover, the group of experts from United Nation States said that underdeveloped countries are those countries having low real per capita income when compared with the real per capita income of the USA, Canada, Australia and western European countries. It fails to create satisfactory level of living standard to the people though it has the potential of growth, but its unsuitable feature hinders its growth. Some of the common features of the underdeveloped economy are low per capita income, slow growth rate of per capita income, economic inequalities, low level of living, low rate of capital formation, backward techniques of production, high growth rate of population and dependency burden, low productivity of labour, underutilization of natural resources, large scale unemployment, dominance of agriculture, high incidence of poverty, infrastructural backwardness, low volume of foreign trade. However, underdevelopment is the relative concept because it the compression of quality of life between the economics that differentiates them in underdeveloped and developed. Moreover, underdevelopment sustains absolute poverty. Absolute poverty is the situation in which people fail to meet their basic needs of food, clothes and shelter. Thus, underdevelopment and absolute poverty go together or underdevelopment sustains absolute poverty.
Economic growth is an increase in production of goods and services of the country compared to the previous year. The economic growth can be considered as a path way to the economic development. Economic growth occurs when there is an increase in number of people in workforce or quality of workforce improves. For example, training and education improves the quality of workforce. Also when there is an increase in capital and machinery, improvement of technology. In the short run economic growth is caused by an increase in aggregate demand (AD). If there is spare capacity in the economy than an increase in AD will cause higher level of real Gross Domestic Product (GDP). Aggregate demand change with the influence of factors such as;
Low interest rates; lower interest rate reduce the cost of borrowing and encourages consumer spending and firms to invest. Lower interest rate also mortgage payment and increases the disposable income of the people.
Increase government spending (G); when government increase investment on building new roads or increase spending on welfare scheme. Money in circulation will increase and people’s income will rise.
Increased wages; higher real wage increases the disposable income of the consumer which boost the spending of the people.
Devaluation; A fall in the value of export rate make export cheaper and improves the quantity of exports but this can happen only in the country with large volume of export goods. Depreciation also makes import more expensive, reducing the quality of import and making domestic goods more relatively attractive.
The constant growth of countries real GDP and low level of unemployment will translate to economic development. In 1929, Argentina, dominated the world economy for being giant in automobile production which raise her GDP and consequently increases the standard of living. But today Argentina is considered as developing countries because of her poor economic development policy which leads to the poor performance of the economy. The government of the county can adopt sophisticated infrastructure which boost the interest of the businessman to incur large scale investment. Moreover, government needs to focus on development of the infrastructure like roads, bridges, ports and sewer system which has a dual impact, easy accessibility to this facility boost the interest of entrepreneur to expand their size of business as well as creates employment opportunities. The economist favoring the spending on infrastructure as a economic catalyst argue that having top- notch infrastructure increases productivity by enabling business to operate as effectively as possible CITATION Mis86 \l 1033 (Misra & Puri, 1986).
Additionally, spending on infrastructure creates more jobs opportunity as more worker is needed to complete the targeted project. It is also capable of spawning new economic growth. For example, the construction of new highway might leads to the other investments such as gas station, automobile workshop, and general shops and retail stores. Economic growth is also driven by the consumers spending and business investment. The companies that invest in new technology and manufacturing plants will be able to create jobs opportunity. Thus, companies hair more workers and proportion of people earning wages and salaries increase, so the quantity demand will rise due to the change in people’s income level. Also wages and salaries will rise due to the improvement in the output with new methods of production. Also some countries have designed tax cuts and tax rebates to put more money in the hands of consumers CITATION Uke08 \l 1033 (essay, 2108). With the view that, those consumer spends this money in various businesses, which increases business revenue, cash flow and profits. With more cash, companies will be able to improve technology, grow and expand the business. All this methods will increase the production of the companies and leads to the outward shift of the Production Possibility Curve (PPC).
The economic development is a multi- dimensional phenomenon because it not only focuses on income of the people but also in the improvement in the living standard of the people. In the sense, that economic development take into consideration all the social, cultural and economic wellbeing for the development of the country. Economic development is a process of where low income national economics are transformed into modern industrial economics. It involves qualitative and quantitative improvement in a country’s economy. Political and social transformations are also taken into consideration by economic development.
Charles P. Kindleberger and Bruce Herrick (1958) point out; “Economic development is improvement in material welfare especially for the person with the lowest income, the eradication of mass poverty with its correlates of illiteracy, disease and early death, changes in the composition of inputs and outputs that generally includes shifts in the underlying structure of the production away from agriculture towards industrial activities, the organization of the economy in such a way that productive employment is generally among working age population rather than the situation of a privileged minority, and the corresponding, greater participation of broad based groups in making decision about the direction, economic and otherwise, in which they should move their welfare” CITATION Cha58 \l 1033 (Kindleberger & Herrick, 1958).
The economic development implies both increases in the quantity of output as well as improvement in the quality of output. Also there is a change in technical and institutional arrangement by it is produced and distributed. However economic growth implies that increase in the amount of goods and services produced in the economy compared to the previous year irrespective of technological progress and quality of goods and services produced. So, all types of growth are not good for the nation only inclusive and substantial growths are important because they help to reduce poverty. Hence, economic development can be considered as more inclusive and precise method which operates in long run, whereas economic growth is exclusive process as compare to economic development and it operate in short run. However, economic growth is path way to the economic development (John, 2001).
The economic development includes all the stages of economic transformation from underdeveloped to Development. The stages of economic transformation are underdevelopment followed by growth and finally development. In the way underdevelopment and development are connected by growth. The sustainability and the development are the significant factors which every economist most need to take into consideration for of present as well as future generation. The proper planning and coordination of resource utilization will leads to the sustainable growth of the nation. Thus, effective utilization of resources with knowledgeable and skilled manpower leads to the growth and development. Therefore, an economic development is more inclusive and long run approach and also it is multidimensional concept. Finally, economic growth is necessary condition to transform the underdeveloped economy to developed economy but it is not sufficient condition.
Bibliography
BIBLIOGRAPHY Essay, U. (2108). Essay on Economic Growth and Development. Retrieved from Economicsdiscussion: https;//www.ukessays.com/essays/economics/economic- growth.php?vers=1
John, B. P. (2001). The Regional Dimensions of Rostow's Theory of Growth. The journal on Development theoris , 3.
Kindleberger, C. P., & Herrick, B. (1958). Concept oF Economic DEvelopment .
Misra, S., & Puri, V. (1986). Economics of Development and Plannaing. Mumbai: Hinalaya Pub;ishing House Pvt.Ltd.,.
Todaro, M. P., & Smith, S. C. (2004). Economic Development . Delhi : Person Education (Singapor) Pet.Ltd.
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