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Module 5. Economic Growth and Development

This document discusses the differences between economic growth and economic development. Economic growth refers to a short-term increase in metrics like GDP and per capita income, while economic development involves long-term qualitative and quantitative changes that improve standards of living. Development includes reducing poverty, increasing education and health outcomes. Countries are classified as developed, developing, or underdeveloped based on metrics like the Human Development Index that measure overall quality of life. Poverty and lack of opportunities can create a vicious cycle that keeps countries in a state of underdevelopment.

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Nikhil Chandran
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Download as PDF, TXT or read online on Scribd
151 views

Module 5. Economic Growth and Development

This document discusses the differences between economic growth and economic development. Economic growth refers to a short-term increase in metrics like GDP and per capita income, while economic development involves long-term qualitative and quantitative changes that improve standards of living. Development includes reducing poverty, increasing education and health outcomes. Countries are classified as developed, developing, or underdeveloped based on metrics like the Human Development Index that measure overall quality of life. Poverty and lack of opportunities can create a vicious cycle that keeps countries in a state of underdevelopment.

Uploaded by

Nikhil Chandran
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Economic Growth and Development

• Growth Vs Development
• Similarity in Human Development “lifelong process of physical,
behavioral, cognitive, and emotional growth and change”

• What does it mean for a country to be “developed or developing?”


Low, Middle, High Income

• What is the difference b/w Economic Growth and Development?


• What is “Development?”
• General meaning -new stage in a changing situation
• Development is a process that creates growth, progress, positive
change or the addition of physical, economic, environmental, social
and demographic components.
• Economic Growth
• i.e, increase in the real output of the country in a particular span
of time.
• refers to the rise in the value of everything produced in the
economy. It implies the yearly increase in the country’s GDP or
GNP, in percentage terms.
• Increase in the indicators like GDP, per capita income etc.
• Short term process
• Developed Economies
• Quantitative changes
• Economic Development
• involves rise in the level of production in an economy along
with the advancement of technology, improvement in living
standards and so on.
• Includes Improvement in life expectancy rate, infant mortality
rate, literacy rate and poverty rates.
• Long term process
• Developing Economies
• Qualitative and quantitative changes
Economic development…..
• According to Sen, development is about creating freedom for
people and removing obstacles to greater freedom. Greater
freedom enables people to choose their own destiny.
• Obstacles to freedom, and hence to development, include
poverty, lack of economic opportunities, corruption, poor
governance, lack of education and lack of health.
Long Term

Short Term Economic Development

Development
Economic
Growth
• The Human Development
Index (HDI)
National Income • Quality of Life-PQLI/SLI
GDP • Inequality-Gini Index
GNP • Population
Per capita • Life expectancy
• Adult literacy
• Others.. Social Progress,
Sustainable development, Socio
Economics etc
• Developed and Developing Nations

• HDI ranking- United Nations Development Report’s 2018


• http://worldpopulationreview.com/countries/developed-
countries/
Underdevelopment
• The term underdevelopment refers to that state of an economy
where levels of living of masses are extremely low due to very
low levels of per capita income resulting from low levels of
productivity and high growth rates of population.

• Underdeveloped countries are now known as ‘developing


countries’ signifying that such nations are capable of and are
indeed making serious efforts to overcome their problems of
poverty and low income.
Basic Characteristics of the under
developed Economy
• Low per capita income.
• Low level of living
• High rate of population growth
• High levels of unemployment and underemployment
• Predominance of agriculture in the economy
• Low rate of capital formation
• Maldistribution of wealth/Assets
• The socio-economic indicators
State of underdeveloped
• Professor Nurkse, that “a country is poor because it is poor”
• Poverty
• Poverty is a state or condition in which a person or community
lacks the financial resources and essentials to enjoy a minimum
standard of life and well-being that's considered acceptable in
society.
• Poverty is a severe constraint on normal living. It is a forced
reduction in consumption, due to insufficient income and
unbearable surrounding conditions.
• It’s a condition where people cannot afford the basic necessary
amenities like food, clothing and shelter
• Types of poverty are Absolute poverty and relative poverty
• Absolute poverty- a condition characterized by severe deprivation
of basic human needs, including food, safe drinking water,
sanitation facilities, health, shelter, education and information.
• Relative poverty-a condition in which people lack the minimum
amount of income needed in order to maintain the average standard
of living in the society in which they live.
Vicious Circle of Poverty
• "Implies a circular constellation of forces tending to act and
react in such a way as to keep a country in the state of
poverty".

• Why some countries are Poor?


• & Others are Rich?
Low Real
Income

Low
Productivity
Vicious Circle Low savings
of Poverty Low buying power
Low demand

Capital deficiency
Low rate of Capital
Low Investment
Formation

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