Meaning of economic progress, growth and development Difference between growth and development Characteristics of Underdeveloped countries

1. Economic Development
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2. Meaning of Economic Progress-
• Economic Progress, Economic Growth and Economic Development
are used interchangeably to mean almost same thing:
• Progress is a straight and upward movement. Progress is part of
the development in some sectors. Progress deals with the current
status in a very short period.
• Progress is concerned with the visible results in positive direction.
It is a word used to denote betterment or improvement in any
thing. The term progress is a general term with no specific
meaning in economics and used to express the growth and
development.

3. Economic Growth:
• A term borrowed from life sciences growth in economics means
economic growth.
• An increase in economic variables over a period of time is
economic growth. Quantifiability is an important feature of
growth. We can measure industrial production, road length, food
production, educated persons, or per capita income of people to
measure growth.
• Growth rates can be calculated annually in percentage across
various sectors. It can be positive or negative. It is measured over
a short period.

4. Meaning of Economic Development:
• During initial period economists used development only in terms
of growth in national product over a long period. It was believed
that growth once achieved will trickledown and will result in
better quality of life.
• “Economic Development is a process whereby an economy’s real
national income increases over a long period of time”.
• Three important things:
• Economic Development is a process,
• Real national income increases
• Long period

5. Failure Trickle down Theory
• Later it was realised that growth has not “trickle down” and has
not resulted in the better quality of life as claimed by laissez-faire
economists.
• The economists than defined economic development differently
from economic growth to include the following:
• Nutritional level, health, sanitation, drinking water, vaccination,
education and other such indicators which makes quality of life
better. Thus we can say economic development is both
quantitative as well as qualitative progress or growth.

6. Prof. Goulet Three Core Values of Development
Life Sustenance:
The life-sustaining basic human needs include food, shelter, health and protection. When
any one of these is absent or in critically short supply, a condition of absolute
"underdevelopment" exists.
Self-esteem:
A second universal component of good life is self- esteem- a sense of worth and self-
respect- of not being used as a tool by others for their own ends. Due to the
significance attached to material values in developed nations, worthiness and esteem
are now-a-days increasingly conferred only in countries that possess economic wealth
and technological power- those that have developed.
Freedom
Arthur Lewis stressed the relationship between economic growth and freedom from
servitude when he concluded that "the advantage of economic growth is not that
wealth increases happiness, but that it increases the range of human choice
Goulet, D. (1971) The Cruel Choice: A New Concept in the Theory of Development, New York, Athenaeum

7. Economic growth is a single dimensional quantitative concept
which is concerned only with the rate of increase in national
income. It ignores distribution of income and it ignores qualitative
aspects of human life.
Economic Development
Economic development is broader in nature. It not only includes
the quantitative change but also includes certain qualitative
changes in the economy.
Economic development means not just increase in the real per
capita income but also reduction in economic-divide, poverty,
illiteracy and unemployment.
Thus, economic development includes both economic growth as
well as social welfare.

8. Economic development focuses on inclusive growth – Growth that
includes all sectors of the economy and all sections of the society.
The following discussion outlines the basic differences between
Economic Growth and Development:
Difference between Economic Growth Economic Development
Single dimension Concept: Economic growth is merely a
quantitative concept. It is concerned with rate of increase in
national income.
Double / Multi dimension Concept: Concept of economic
development is both quantitative and qualitative in nature. It is
concerned with welfare of people (a qualitative aspect) along with
increase in per capita income (a quantitative concept).

9. Growth Ignores Distribution of Income: Distribution of income
is ignored in case of economic growth. In spite of increase in
income, number of poor people may rise if the distribution of
income becomes further unequal.
Development Considers Distribution of Income: In case of
economic development, distribution of income is given due
consideration. Reduction in inequality (of income distribution) is
one of the principal targets of economic development.
Inequality of income and wealth must be reduced.

10. Independent of Structural, Institutional and Technical
Changes:
Economic growth may occur independent of any structural,
institutional and technical changes in the economy. Associated
with socio-technological Change:
Economic development is invariably associated with significant
structural, institutional and technical changes in the economy.
Development is a qualitative concept and relates to human
development index (HDI) Gender Development Index (GDI)
Human Poverty Index (HPI). Growth is quantitative concept.

11. Measurement of Economic Growth
Economic growth is the rate of change at which an economy is
growing year after year or the percentage change in the Gross
Domestic Product (GDP) of a country year after year.
The economic growth can be actual growth or potential
growth.
Potential growth is also sometimes called as targeted growth.
Economic development is a normative concept which takes into
account both qualitative and quantitative aspects. Economic
development is an increase in overall living standards and
quality of life of the people, on this basis, there are several
parameters for measurement of the economic development as
discussed below:

12. Rise in Real National Income
Real national income at constant prices is conventionally a
comprehensive measure of economic growth as well as
development of an economy.
It is estimated by dividing national income at current prices (also
called monetary income) by the index of price level (showing the
percentage change in price level over time).
Generally, the increased real national income means higher
economic development.
Structural, Institutional and Technical Changes Development
process must bring about structural, institutional and technical
changes which stimulate the process of growth and social justice.

13. Real per capita income is often considered as a better
indicator of economic development than the real national
income.
Economic Welfare Economic development of a country can be
viewed better in terms of economic welfare of the people.
Economic welfare means
lower levels of poverty and inequalities,
better health conditions,
high literacy levels and
better standard of life.

14. DEVELOPED, UNDERDEVELOPED AND THE DEVELOPING ECONOMIES:
DEVELOPING COUNTRIES
•Underdeveloped, ‘Third World’, Poor ,Low income & developing
countries are synonymous nomenclatures used
interchangeably.
•But the used of the word developing countries is preferred
signifying that these countries are capable of making reasonable
economic progress. There is a dynamism in this word.

15. • A developing economy is essentially marching to
progress and prosperity. The word underdeveloped or
the poor or the low income countries is some what a
static term and gives an inferior feeling.
• Meaning of developing countries- Developing Countries
are those countries which have low standard of living
and the level of industrial production is well below their
capacity which may be achieved with some financial and
technical assistance.

16. CHARACTERISTICS OR SALIENT FEATURES OF UNDERDEVEOPED COUNTRIES:
• Low Income:
•For the current 2017 fiscal year, low-income economies are defined as
those with a GNI per capita, calculated using the World Bank Atlas
Method of $1,025 or less in 2015;
•lower middle-income economies are those with a GNI per capita
between $1,026 and $4,035;
•upper middle-income economies are those with a GNI per capita
between $4,036 and $12,475;
•high-income economies are those with a GNI per capita of $12,476 or
more.

17. • CHARACTERISTICS OR SALIENT FEATURES OF UNDERDEVEOPED COUNTRIES: Contd..
• Low Levels of Living Since, about 3/4th of world’s population
lives in underdeveloped countries which have less than one-fifth
share in world income. It is obvious that a vast majority of people
in these countries that must be living under conditions of poverty,
malnutrition, disease, illiteracy, etc. even basic necessities of life
are not available to them.
• Income inequalities- Apart from wide gap between income levels
in advanced and underdeveloped economies there also exists grave
income inequalities between the rich and poor people within the
underdeveloped countries.

18.  CHARACTERISTICS OR SALIENT FEATURES OF UNDERDEVEOPED COUNTRIES: Contd..
 Widespread Poverty
 Low Levels of Productivity
 High Rates of Population Growth
 Low Rates of Capital Formation
 Technological Backwardness
 Predominance of Agriculture in the Economy
 Export of Primary Products
 High levels of Unemployment and Underemployment
 Weak Infrastructure
 Low Social Indicators of Development
 Dependence and Vulnerability in International Relations
 Poor Quality of Human Capital

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