Course Content
DEVELOPMENT ECONOMICS
DEVELOPMENT ECONOMICS
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Development Economics: A Theoretical Overview
What do you mean by development
ECONOMIC GROWTH V/S DEVELOPMENT
ECONOMIC GROWTH V/S ECONOMIC DEVELOPMENT
ECONOMIC DEVELOPMENT : ITS MEARURING WAYS
Economic development is a process of development of Underdeveloped Countries
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ECONOMIC DEVELOPMENT : ITS MEASURING WAYS
Economic Development-its measuring ways
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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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MEASUREMENT OF ECONOMIC GROWTH
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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ECONOMIC WELFARE
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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PER CAPITA INCOME MEASUREMENT
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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Physical Quality of Life Index
HUMAN DEVELOPMENT INDEX (HDI)
BEST METHOD OF MEASUREMENT WHETHER PQLI or HDI
THEORIES OF POPULATION
This topic includes the various theories related to Population in which Malthusian theory is the basic concept . with the passage of time , various economists have given different theories . that are included in this
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MALTHUSIAN THEORY OF POPULATION
Neo-Malthusianism Theory of Population
Optimum Population Theory
The Demographic Transition Theory of Population
Marxist Theory of Population
Boserup’s Theory of Population
Under Population Theory of Population
Carrying Capacity Theory of Population
Population Momentum Theory
Overpopulation and Resource Scarcity Theory of Population
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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CAPITAL FORMATION
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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Nurksey’s Theory of Disguised Unemployment
Lewis Model of Disguised Unemployment
AMARTYA SEN’ S VIEWS DISGUISED UNEMPLOYMENT
Do Saving Potentials are the results of Disguised Unemployment ?
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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Lewis Model with Unlimited Supply of Labour
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https://youtu.be/PxA6RE3d0t8?si=Q5gSTjD0K7Rsuv1c
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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Dualism : Meaning & Features
SOCIAL DUALISM
TECHNOLOGICAL DUALISM THEORY
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Big Push Theory
this theory explains the investment in all sectors of the economy
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BIG PUSH THEORY
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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Leibenstein’ s Critical Minimum Efforts Theory
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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Balanced Growth Model
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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Unbalanced Growth Theory
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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Rostow’s Stages of Economic Growth
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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CLASSICAL MODEL OF GROWTH
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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Harrod-Domar Model of Growth
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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ECONOMIC PLANNING
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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price mechanism in economic planning
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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CHOICE OF TECHNIQUE
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
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The best
method to measure economic development depends on the specific aspect of
development you wish to capture. Both the Human Development Index (HDI)
and the Physical Quality of Life Index (PQLI) are valuable, but they
have different strengths and limitations. Here’s an analysis:

 

1. Human Development Index (HDI)

  • Components:
    1. Life expectancy at birth
      (health).
    2. Education (mean years of
      schooling and expected years of schooling).
    3. Gross National Income (GNI)
      per capita (adjusted for purchasing power parity, PPP).

***(Gross National Income(GNI) per capita is the dollar value of a
country’s final income in a year divided by its population )

  • Strengths:
    • Broad Coverage: Captures health,
      education, and income dimensions, giving a holistic view of development.
    • Income Dimension: Includes economic well-being
      (GNI per capita), which is crucial for assessing living standards.
    • Global Comparability: Widely used by
      organizations like the UNDP, allowing consistent international
      comparisons.
    • Dynamic Adjustments: Updated methodologies
      ensure it reflects contemporary priorities (e.g., inequality-adjusted
      HDI).
  • Limitations:
    • Simplification: Aggregates data into a
      single index, potentially obscuring disparities.
    • Income Bias: Heavily influenced by
      GNI, potentially overemphasizing economic growth over social outcomes.
    • Exclusion of Environmental
      Factors      :
      Does not directly account for sustainability or ecological concerns.

 

2. PhysicalQuality of Life Index (PQLI)

  • Components:
    1. Life expectancy.
    2. Infant mortality rate.
    3. Basic literacy rate.
  • Strengths:
    • Focus on Basic Needs: Concentrates on
      fundamental human welfare, prioritizing health and education outcomes
      over income.
    • Simplicity: Easy to calculate and
      interpret, making it accessible for developing countries with limited
      data.
    • Direct Indicators: Focuses on tangible
      aspects of human well-being.
  • Limitations:
    • Exclusion of Income: Omits economic indicators
      like income or consumption, limiting its scope in capturing overall
      development.
    • Outdated Framework: Developed in the 1970s,
      it does not address modern development concerns like inequality,
      environmental sustainability, or gender disparities.
    • Narrow Scope: Focuses on basic outcomes
      without considering higher-level development factors like tertiary
      education or economic empowerment.

 

Comparison

Criterion

HDI

PQLI

Dimensions
Covered

Health,
education, income

Health,
basic literacy, infant mortality

Economic
Factors

Included

Excluded

Global
Applicability

High

Limited

Modern
Relevance

High

Moderate

Simplicity

Moderate

High

 

Which is Better?

  • HDI is generally better for
    capturing broader aspects of development because it includes both social
    (health and education) and economic (income) dimensions. Its global
    acceptance and regular updates make it more relevant for contemporary
    analysis.
  • PQLI is more suited for contexts
    where the focus is exclusively on basic human needs and income data is
    unreliable or irrelevant.

 

Why Choose HDI Over PQLI?

  1. Comprehensive Scope: HDI provides a
    multidimensional perspective by combining economic and social indicators.
  2. Modern Applicability: It reflects current
    development priorities, including inequality and gender disparities (via
    extensions like the Gender Development Index).
  3. Policy Insights: HDI offers actionable
    insights for policymakers by highlighting areas needing improvement (e.g.,
    education vs. health vs. income).

 

In
summary, HDI is the more robust and widely applicable tool for measuring
economic development, while PQLI is useful in specific contexts
emphasizing basic needs.

https://onlineeducoach.com/economics-statistics-micro-development-marketing/best-method-of-measuring-economic-development-hdi-or-pqli/

 

 

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