Course Content
ECONOMIC DEVELOPMENT : ITS MEARURING WAYS
Economic development is a process of development of Underdeveloped Countries
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MEASUREMENT OF ECONOMIC GROWTH
Meaning of Economic Growth (Short Definition): Economic growth refers to the increase in the production of goods and services in an economy over a specific period, typically measured by the rise in a country’s Gross Domestic Product (GDP) or Gross National Product (GNP). It indicates the expansion of an economy’s capacity to produce and consume. Measurement of Economic Growth (Detailed Explanation): Economic growth is measured using various indicators and methods. The most commonly used metrics are: 1. Gross Domestic Product (GDP): Definition: GDP is the total monetary value of all finished goods and services produced within a country’s borders during a specific period (usually quarterly or annually). Types of GDP Measurements: Nominal GDP: Measures GDP at current market prices without adjusting for inflation. Real GDP: Adjusts nominal GDP for inflation to reflect the true growth in output. Per Capita GDP: Divides GDP by the population to measure the average income per person, indicating living standards. 2. Gross National Product (GNP): Definition: GNP includes the value of goods and services produced by a country’s residents, regardless of whether the production takes place within or outside the country’s borders. Formula: GNP=GDP +Net income from abroadtext{GNP} = text{GDP} + text{Net income from abroad}GNP=GDP +Net income from abroad. 3. Growth Rate of GDP: Definition: The annual percentage change in GDP over time, which shows the rate at which the economy is growing. Formula: GDP Growth Rate=(GDP in Current Period−GDP in Previous Period GDP in Previous Period)×100text{GDP Growth Rate} = left(frac{text{GDP in Current Period} – text{GDP in Previous Period}}{text{GDP in Previous Period}}right) times 100GDP Growth Rate=(GDP in Previous Period GDP in Current Period−GDP in Previous Period)×100. 4. Productivity Measures: Definition: Measures growth in output per unit of labor or capital, indicating how efficiently resources are being utilized. Example: Labor Productivity = Output / Hours Worked. 5. Other Indicators: Industrial Production Index (IPI): Measures output in industrial sectors. Employment Rates: Indicates economic expansion if job creation aligns with growth. Consumption and Investment Trends: Higher consumer spending and investment reflect economic growth. Why GDP is the Most Common Measure: Comprehensive: Captures all goods and services within an economy. Comparable: Allows for easy comparison across countries and time periods. Widely Accepted: Used by governments, international organizations, and researchers. Limitations of GDP as a Measure of Growth: Ignores Distribution: GDP does not reflect income inequality. Non-Market Activities: Excludes unpaid labor and informal economy activities. Environmental Costs: Fails to account for resource depletion and pollution. Quality of Life: GDP growth doesn’t necessarily indicate improved well-being or happiness. For a holistic understanding, other metrics like the Human Development Index (HDI) or Green GDP are often used alongside GDP to measure economic progress.
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ECONOMIC WELFARE
Economic Welfare is a term related with Economic Development where key indicator are defining the major purpose i.e. whether economic development must be done with economic welfare or not
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PER CAPITA INCOME MEASUREMENT ( DEVELOPMENT ECONOMICS )
This topic relates to measurement of per capita income , total national income and total population
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PHYSICAL QUALITY OF LIFE INDEX
This topic relates to Modern methods of measuring economic development like PQLI and HDI , we shall discuss them both
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CAPITAL FORMATION IN DEVELOPMENT PROCESS
Capital formation is a critical concept in development economics, emphasizing the accumulation of capital assets to foster economic growth and development.
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DISGUISED UNEMPLOYMENT THEORIES
Disguised unemployment occurs when more people are employed in a sector than are actually needed to sustain its output, meaning the marginal productivity of the excess labour is zero or close to zero
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LEWIS MODEL OF UNLIMITED SUPPLY OF LABOUR
the Lewis model remains an essential tool for analysing the dynamics of economic development in dual-sector economies.
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DUALISM
The topic dualism includes the co-existence of modern sector with traditional sector , developed countries with underdeveloped countries , labour intensive techniques sector with capital intensive techniques sector
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Big Push Theory
this theory explains the investment in all sectors of the economy
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Leibenstein’ s Critical Minimum Efforts Theory
This theory explains the investment in few sectors of the economy and by the process of investment all other sectors shall also develop
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BALANCED GROWTH THEORY
Balanced Growth theory is a collection of views of various economists like Prof. Nurksey , Lewis , Arthur Young , Stovasky and Rosenstein Rodan . this concepts explains the investment process in all sectors of the economy and its impact on various sectors .
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UNBALANCED GROWTH THEORY
This theory relates unbalancing the economy by investing in either social overhead capital sector or direct productivity sector . which shall automatically develop the another sector and increase in National income , productivity in all sectors and economic development .
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ROSTOW’S STAGES OF ECONOMIC GROWTH
this topic relates the development phases of every countries whether developed or underdeveloped . he describes five stages of economic growth process .
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Classical Model of Growth
The classical growth model emphasizes economic growth through capital accumulation, labor, and natural resources, highlighting diminishing returns and constraints from fixed resources. Technological progress offsets these limits, enhancing productivity. Developed by economists like Adam Smith and Malthus, the model underscores structural factors influencing growth and informs sustainable development strategies.
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HARROD MODAR MODEL OF GROWTH
The Harrod-Domar Model explains economic growth based on savings and investment. Growth depends on the savings rate ( 𝑠 s) and the capital-output ratio ( 𝑘 k), which measures investment efficiency. The growth rate ( 𝑔 g) is given by 𝑔 = 𝑠 𝑘 g= k s ​ , meaning higher savings and lower 𝑘 k lead to faster growth. The model highlights the importance of savings and efficient investment for sustained growth but assumes a fixed relationship between capital and output, ignoring factors like technology, human capital, and institutions. It’s particularly relevant for understanding why developing countries struggle with low growth due to insufficient savings and inefficient use of resources.
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ECONOMIC PLANNING
Economic planning in development economics is a strategic process where governments set goals and allocate resources to address challenges like poverty, unemployment, and inequality. It prioritizes sectors such as industrialization, agriculture, and infrastructure while focusing on sustainable development, self-reliance, and balanced regional growth. Through targeted interventions, planning aims to accelerate economic growth, reduce disparities, and create jobs. Challenges include resource constraints, inefficient implementation, and external shocks. Successful planning relies on effective governance, public participation, and international cooperation. Countries like South Korea and China showcase how comprehensive planning can transform economies, making it a crucial tool for sustainable and inclusive development.
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PRICE MECHANISM IN ECONOMIC PLANNING
The price mechanism is the process by which prices are determined in a market economy through the interaction of supply and demand. It acts as a signal for both producers and consumers, guiding the allocation of resources efficiently. In economic planning, governments may intervene in the price mechanism through price controls, subsidies, or taxes to achieve specific developmental goals such as economic growth, income redistribution, and sustainability. While the price mechanism is effective in ensuring resource allocation, challenges like market failures, inflation, and unequal distribution may require government intervention to maintain stability and equity in developing economies.
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CHOICE OF TECHNIQUE
The choice of technique refers to the decision-making process regarding the type of technology or production methods to be adopted in a developing economy. This choice often involves a trade-off between capital-intensive and labor-intensive techniques.
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Course Completion
So , Guys this course completes with different topics related to Development Economics . and their explanations. so if you guys require any further topic to be expand with kindly drop a message .Hope you enjoyed this. Thanks
Protected: DEVELOPMENT ECONOMICS

 

Population
Population

There are various types of Theories related to population and its impact on Economy .it refers to the study of the relationship between population growth and economic, social, and environmental development. It seeks to understand how changes in population size, composition, and distribution impact resources, living standards, and societal well-being. Over time, various population theories have been developed to explain these dynamics. This will be a series of various theories and their detailed description . so let’s discuss first theory of Population Growth that is  Malthusian Theory :

  1. Malthusian Theory
  • Proposed by: Thomas Robert Malthus (1798) in his work “An Essay on the Principle of Population.”
  • Core Idea:
    • Population grows geometrically (exponentially), while food supply grows arithmetically (linearly).
    • This mismatch leads to overpopulation, resulting in “positive checks” (famine, disease, war) to control population or “preventive checks” (delayed marriage, moral restraint).
  • Implications:

Overpopulation strains resources, leading to poverty and societal collapse

The
Malthusian Theory of Population

The
Malthusian theory of population was proposed by Thomas Robert Malthus in 1798
in his seminal work titled An Essay on the Principle of Population. This
theory, which has significantly influenced debates on population growth and
resources, revolves around the relationship between population growth and the
availability of resources, particularly food. Malthus argued that while
population tends to grow at a geometric rate (doubling every 25 years under
ideal conditions), resources such as food supply increase at an arithmetic
rate. This disparity, he asserted, would eventually lead to a situation where
the growth of the population outstrips the capacity of resources to sustain it,
resulting in societal and environmental challenges.

The Principle of Population Growth

At the
core of Malthus’s theory lies the observation that human beings have a natural
inclination to reproduce, leading to population growth. Malthus posited that
population growth follows a geometric progression (2, 4, 8, 16, etc.), given
the absence of checks. In contrast, the means of subsistence , such as
agricultural output, increase in an arithmetic progression (1, 2, 3, 4, etc.).
This disparity forms the foundation of the Malthusian argument, highlighting a
fundamental imbalance between human reproduction and resource availability.

Malthus’s
insights were shaped by the socio-economic context of 18th-century England,
which was experiencing rapid population growth. Observing this phenomenon, he
sought to explain the potential implications of unchecked population expansion.
His analysis was predicated on the belief that while human ingenuity could
improve agricultural productivity, these advances would not keep pace with the
exponential growth of human populations over time.

The Malthusian Trap

Malthus
introduced the concept of the “Malthusian Trap,” a situation where any increase
in food supply would lead to a corresponding increase in population,
neutralizing any improvements in living standards. In other words, periods of
economic or agricultural prosperity would encourage higher birth rates,
eventually leading to overpopulation and a return to subsistence-level
conditions.

According
to Malthus, this cyclical process occurred because population growth was driven
by two factors: the natural reproductive capacity of humans and societal
structures that permitted or encouraged high fertility rates. The result was a
continuous struggle to balance population and resources. In Malthus’s view, the
trap was an inevitable consequence of humanity’s biological and social nature,
unless specific checks were imposed.

Checks on Population Growth

Malthus
identified two types of checks that regulate population growth:

  1. Preventive Checks: These are measures that
    reduce the birth rate and include moral restraints, such as delayed
    marriage and celibacy, as well as societal factors like access to
    contraception. Malthus advocated for preventive checks, particularly moral
    restraint, as a means to achieve sustainable population growth.
  2. Positive Checks: These are factors that
    increase the death rate and include natural calamities (such as famines,
    epidemics, and diseases), wars, and poor living conditions. Positive
    checks, according to Malthus, were nature’s way of restoring the balance
    between population and resources when preventive measures failed.

Malthus
argued that societies that failed to implement adequate preventive checks would
be subjected to positive checks, which he viewed as catastrophic for human
well-being. For Malthus, these checks were necessary to maintain the balance
between population size and resource availability.

The Law of Diminishing Returns

Malthus’s
theory also incorporates the economic principle of diminishing returns, which
states that as additional units of input (e.g., labor or capital) are applied
to a fixed amount of land, the incremental increase in output will eventually
decline. In the context of agriculture, this principle implies that efforts to
increase food production will face limitations due to the finite nature of
arable land and declining productivity over time.

This
aspect of the theory underscores Malthus’s skepticism about the capacity of
technological and agricultural advancements to overcome the constraints imposed
by population growth. He believed that while short-term improvements in
productivity were possible, they could not indefinitely offset the pressures of
an exponentially growing population.

Criticism and Counterarguments

Since its
publication, the Malthusian theory of population has been the subject of
extensive criticism and debate. Critics have pointed to several shortcomings in
Malthus’s assumptions and predictions:

  1. Technological Advances: Critics argue that Malthus
    underestimated the impact of technological innovation and scientific
    progress on agricultural productivity. The Green Revolution, for instance,
    demonstrated that significant improvements in crop yields could be
    achieved through the application of modern farming techniques,
    fertilizers, and irrigation systems.
  2. Demographic Transition: The demographic transition
    theory challenges Malthus’s view of population growth as a perpetual
    threat. It observes that as societies industrialize and improve living
    standards, birth rates tend to decline, stabilizing population growth over
    time. This pattern has been observed in many developed countries.
  3. Resource Distribution: Malthus’s focus on the
    availability of resources overlooks issues related to their distribution
    and access. Critics contend that hunger and scarcity are often the result
    of unequal distribution rather than absolute shortages.

Cultural and Social Factors: Malthus’s emphasis on
biological and economic factors fails to account for the influence of cultural
and social norms on population behavior. For instance, changes in societal
attitudes toward family planning and gender roles have played a significant
role in reducing fertility rates globally. The Malthusian Theory of Population

The
Malthusian theory of population was proposed by Thomas Robert Malthus in 1798
in his seminal work titled An Essay on the Principle of Population. This
theory, which has significantly influenced debates on population growth and
resources, revolves around the relationship between population growth and the
availability of resources, particularly food. Malthus argued that while
population tends to grow at a geometric rate (doubling every 25 years under
ideal conditions), resources such as food supply increase at an arithmetic
rate. This disparity, he asserted, would eventually lead to a situation where
the growth of the population outstrips the capacity of resources to sustain it,
resulting in societal and environmental challenges.

The Principle of Population Growth

  1. At the core of Malthus’s
    theory lies the observation that human beings have a natural inclination
    to reproduce, leading to population growth. Malthus posited that population
    growth follows a geometric progression (2, 4, 8, 16, etc.), given the
    absence of checks. In contrast, the means of subsistence

Neo-Malthusianism

Despite
these criticisms, the Malthusian framework has inspired a modern school of
thought known as neo-Malthusianism. Neo-Malthusians share Malthus’s concerns
about the potential consequences of unchecked population growth but emphasize
the role of education, family planning, and environmental sustainability in
addressing these challenges.

Prominent
neo-Malthusian thinkers, such as Paul Ehrlich (author of The Population Bomb),
have argued that rapid population growth poses a significant threat to global
ecosystems, natural resources, and climate stability. Neo-Malthusianism has
also influenced international efforts to promote reproductive health and family
planning programs as a means to achieve sustainable development.

Relevance in the Contemporary World

The
Malthusian theory of population remains relevant in contemporary discussions on
global challenges, including food security, environmental degradation, and
economic inequality. While technological and social advancements have mitigated
some of the dire predictions made by Malthus, the fundamental tension between
population growth and resource constraints continues to shape policy debates.

For
instance, in regions where population growth remains high, such as parts of
sub-Saharan Africa and South Asia, Malthusian concerns about the balance
between resources and population are still pertinent. Additionally, issues such
as climate change, deforestation, and water scarcity highlight the need for
sustainable approaches to managing population and resources.

Conclusion

Thomas
Malthus’s theory of population provides a foundational framework for
understanding the dynamics between human populations and their resource base.
While some of his assumptions and predictions have been proven overly
simplistic or inaccurate, his insights into the potential consequences of unchecked
population growth remain valuable. By emphasizing the importance of preventive
measures and recognizing the limitations of natural resources, Malthus’s work
continues to inform discussions on sustainability, development, and the future
of humanity.