Development
Economic Development Definition
- Economic development is a policy objective that aims to improve the economic and social well-being of people.
- This concept is much broader than economic growth, which only considers the increase in an economy’s output.
Importance of Development Policies
- Government policies aim to reduce disparities in wealth and improve the standard of living.
- They can enhance stability, improve health and education, and promote sustainable development.
Approaches to Development
- There are two main approaches to achieving economic development: Balanced and Unbalanced Growth.
- Balanced growth strategy involves simultaneous investment in all sectors of the economy to ensure that they grow in harmony.
- The unbalanced growth strategy dictates that not all sectors can grow at the same rate and some sectors must grow faster than others.
Indicators of Development
- Gross National Income (GNI) per capita is a conventional measure of a nation’s development. Mixing income per head with population gives a more realistic measure of development.
- Human Development Index (HDI) measures development by combining indicators of life expectancy, educational attainment and income into a composite human development index. It offers a broader definition of well-being and provides a composite measure of three basic dimensions of human development: health, education and income.
- Sustainable Development Goals (SDGs) provide a universal framework for tracking progress towards sustainable development by incorporating environmental, social, and economic targets.
Trade as a Driver of Development
- A country’s ability to trade can significantly influence its level of economic development.
- Trade enables countries to specialise in areas where they have a comparative advantage and generate income.
Challenges to Achieving Development Goals
- Implementation issues like corruption, inadequate infrastructure, lack of education, or the misallocation of resources can hinder development.
- External shocks, such as global recessions or natural disasters, can disrupt development plans.
Economic Policies and Development
- Governments can adopt various economic policies to promote development, such as investing in infrastructure, enforcing anti-corruption measures, implementing tax reforms, and removing trade barriers.
- These policy measures are not without challenges. They require effective implementation and often significant resources.
Role of International Aid and Loans in Development
- International aid helps developing countries by providing funds, technology, and expertise.
- On the other hand, loans from international organisations can lead to indebtedness, potentially hindering long-term development.
Note that it’s vital to understand the distinct features and factors influencing economic development. The ability to evaluate different measures of development can help to assess a country’s progress effectively.