PRESENTED BY : HIMANI

&
MANNAT
 ECONOMIC GROWTH
definition
It is a narrow concept than economic
development. It is an increase in a countrys real
level of national output which can be caused by
an increase in the quality of resources &
improvements in technology or in another way an
increase in the value of goods & services
produced by every sector of the economy.
Economic growth can be measured by an
increase in countrys GDP(gross domestic
product).
 Economic development
definition
Development means both more output and
production and changes in the technical and
institutional arrangements by which factors of
production are produced and distributed.
Economic development shaped not only by
economic factors but also by non-economic
factors like environmental, social ,cultural
,conditions of the economy.
Development is a sustained effort
&
development is a long process
involving changes and requiring
effort
 THREE CORE VALUES OF
DEVELOPMENT
There are three core values of development as
given by Prof Denis Goulet that will make life
better . Core values should serve as conceptual
basis and practical guidelines for understanding
the inner meaning of development.
They are :
Sustenance
Self-esteem
Freedom from servitude
 Economic Growth vs.
Economic Development
It is a narrow concept It is comprehensive
which refers to an increase concept which includes
in countrys real output of economic growth and
goods and services over a progressive changes in
specific period of time. social economic, political,
It attaches less cultural and historical
significance to equitable levels.
distribution of income, It attaches great
reduction in significance to equitable
unemployment and distribution of income,
poverty level reduction in unemployment
and poverty levels.
 It is measurable as it It cannot be easily measured
includes only economic because non-economic
factors like supply of factors are also include like
capital stock, capital- quality of human resources,
output ratio, agricultural i.e., social organization, etc.
surplus, etc. It is not possible to have
It is possible for an economic development
economy to have without economic growth,
economic growth without i.e., a substantial increase in
economic development. an economys national
product is necessary before
it can be hope to expand its
industries. financial
institutions and government
administration.
 Indicators of Economic
Growth
Real national income: (NI) is the sum total of
value of all goods and services produced in a
country during one year, calculated after making
necessary adjustments. National income at
constant prices is also called real national income
national income at constant prices:
Base year = price index of base year always taken 100.
Price index= it shows percentage change in the price of
current year compared to the price of the base year.
National income at constant prices
X base year
Price index for the current year
 Limitations
It does not include growth of population.
It does not indicate nature of investment.
It does not show exploitation of natural
resources or pollution level.
It does not indicate the quality of
production.
Real per capita income
Def.:- (PCI) is define as the income per head
of population in an economy. It is estimated
by dividing national income with the total
population.
Per capita Income= National income
mid-year population
Real per capita income is calculated by formula:

Real per capita income= national income at constant prices

Mid year population
 Limitation
It ignores income distribution of the
country.
It does not take into account the
significance of leisure activities, life
expectancy, education, health, etc.
It ignores the effect of environmental
pollution.
 Indicators of economic
development
Physical Quality of Life Index
:(PQLI) is an attempt to measure the
quality of life or well-being of a country.
It includes three indicators of economic
development.
Life expectancy at age one
Infant mortality rate
Literacy rate
 Human Development Index
Human development index(HDI) is the summary
of human development around the world and
implies whether a country is developed, still
developing, or under developed. the result of the
HDI are published in human developed report
which is commissioned by the united nation
development program(UNDP).
UNDP its first human development report(HDR)
prepared under the guidance of Mahbub-ul-haq
and published in 1990. In 1990 the UNDP is its
first human develop report introduced the concept
of HDI.
Three indicators of HDI

1. Longevity
2. Knowledge
3. Decent standard of living
 Factors in economic
development
Intro. : Many factors affect economic
development of an economy. Just like
construction of a strong building requires
a suitable and even level ground,
bricks, cement, etc. economic
development of an economy depends
on many factors such as :
Economic factors
Non-economic factors
 Economic Factors in
Development
*Natural resources: Natural
resources are resources that exist without actions of
humankind. On earth it
includes: sunlight, atmosphere, water, land (includes all
minerals) along with all vegetation, crops and animal life
that naturally subsists upon or within the heretofore
identified characteristics and substances.
*Human resources: HR are the second most important
and active factor of production. There are two aspects of
human resources :Quantitative & Qualitative
*Capital formation: Capital is one of the important
factors which governs the quantity and the composition
of output in a country.
*Technological development and
innovations: It can be define as new know how
which can help to produce the existing goods at a
lower cost or can produce new verities of goods.
*Entrepreneurship: Technical knowledge from the
economic point of view can proof beneficial only when
it is used in the form of innovations, initiative of which
is taken by courageous group of entrepreneurs.
*foreign capital: Many institution at international
level are ever ready to supply foreign capital to
underdeveloped economies in the form of grants, loan,
direct foreign capital investments.
 Non-Economic factors
Intro: Economic development has much
to do with human endowments, social
attitudes, political conditions and
historical accidents. According to non-
economic factors man and man-made
institutions have their direct bearing on
economic development.
 Non-Economic Factors in
Development
Social and Institutional factors: for
speedy development of a country, suitable
social atmosphere is very essential. People
should have keen desire for better standard of
living. ultimate result of these desire is to
increase national and per capita income.
Political factors: Government behavior
plays an important role in encouraging or
retarding the economic activities. The more
stable and permanent a government is, greater
will be the faith of people.
 Religious and Cultural Factors: In
underdeveloped countries, religious values and
cultural traditions create hinderances in the way
of development. In religious factors we include
bigotism, ignorance, illiteracy, fatalism, and
spiritualism.
Thus, it is clear that both economic and non-
economic factors are inevitable for economic
development. They are not competitive but
complementary.
Sustainable Development
Sustainable development implies the basic
needs of everyone and extending to all, the
opportunity to satisfy their aspirations for
better life, without compromising on the needs
of future.
According to United Nation Conference on
Environment and Development (UNCED):
Development that meets the needs of the
present generation without compromising the
ability of the future generation to meet their
own needs.
Underdeveloped Countries
Def. : underdeveloped economy is that
economy in which there are low level of
living, absolute poverty, low per capita
income, low consumption levels, poor
health services, high death rates, high
birth rates and dependence on foreign
economics.
Features of Underdeveloped
Countries
Low Per Capita Income: The level of income as
measured by per capita GNI is very low in
underdeveloped countries. The estimates of per
capital income are based on prevailing exchange rate
between US dollar and currencies of other countries.
With fluctuation in exchange rates, these per capita
income estimates in dollar terms also fluctuate.
Mass Poverty: Existence of chronic mass poverty is
another characteristic of underdeveloped economies.
Lack of Capital Formation: Developing or
underdeveloped countries of the world are suffering
from poor rate of capital formation. As the level of per
capita income in these countries is very low thus their
volume and rate of savings are also very poor.
 Heavy Population Pressure: The underdeveloped
countries are also characterized by heavy
population pressure.
Agricultural Backwardness: The underdeveloped
countries are also suffering from agricultural
backwardness.
Unemployment Problem: Excessive population
pressure and lack of alternative occupations
have resulted in huge unemployment and
underemployment problem in these
underdeveloped countries.
Shortage of Technology and Skills:
Underdeveloped countries are facing low level of
technology and acute shortage of skilled
manpowers.
 Lack of Infrastructural Development: Lack of
infrastructural development is a common
feature of underdeveloped countries. In
respect of transportation, communication,
generation and distribution of electricity, credit
facilities, social overheads etc.
Mass Illiteracy: Underdeveloped countries are
mostly characterized by the existence of
mass illiteracy. Due to illiteracy the people in
these countries are very much superstitious
and conservative
 Nature of Indian Economy
Low per capita income:In India, the national income and
per capita income is very low and it is considered as one
of the basic features of underdevelopment. As per World
Bank estimates, the per capita income of India stood at
only $ 720 in 2005.
High rate of population growth:In India, the rate of growth
of population has been gradually increasing from 1.31 per
cent annually during 1941-50 to 2.5 per cent annually
during 1971-81 to 2.11 per cent annually during 1981-91
and then finally to 1.77 per cent during 2001-2011.
Poor rate of capital formation: Capital deficiency is one of
the characteristic features of the Indian economy. Both the
amount of capital available per head and the present rate
of capital formation in India is very low.
 Inequality in the distribution of wealth: The report of the
Reserve Bank of India reveals that nearly 20 per cent
of the households owing less than Rs 1000 worth of
assets possess only 0.7 per cent of the total assets.
Low level of technology:The economy of our country is
thus suffering from technological backwardness.
Obsolete techniques of production are largely being
applied in both the agricultural and industrial sectors of
our country.
Low level of living:The standard of living of Indian
people in general is considered as very low. Nearly 25
to 40 per cent of the population in India suffers from
malnutrition. The average protein content in the Indian
diet is about 49 grams only per day in comparison to
that of more than double the level in the developed
countries of the world.
Thank you