Under developed & Develop Economies

Underdeveloped Economy The co-existence of greater or less degree of unutilized manpower. Unexploited natural resources Owing to vicious circle of poverty resources are not fully utilised Per capita income is low as compared to developed countries Techniques of production is conventional ,inefficient and orthodox There is potential of growth

Causes of Under Development: Economic Causes Market imperfection Immobile labour Ignorance of market conditions Monopolistic practices Inflexible economy Lack of capital formation Problem of population Lack of modern enterprise Technical obstacles International obstacles

Causes of Under Development: Noneconomic Causes Social Causes Religious Causes Political Causes Administrative Causes

Economic Development Improvement in health facilities Educational facilities Improvement in overall quality of life of living Increase in per capita income Reduction in malnutrition ,disease , illiteracy , unemployment and inequalities

Approaches Traditional Approach Modern Approach Increase in Real National Income Increase In Economic Welfare OR Increase in Real Per capita Income

Traditional Approach Definition regarding increase in National Income Meaning of Real National Income R= Y/P R= Real Income; Y= Monetary Income at current price P= Price Index Level Definition regarding increase in Real Per Capita Income PCI=NI/Size of population Real PCI= Real NI/ Population

Modern Approach According to Peterson ,”Economic development is a process whereby the real per capita income and economic welfare increase over a period of time.” Indicators of Modern Approach Rise in real PCI Increase in Economic welfare Improvement in Health facility Better Education facilities Judicious use of natural resources

Features of Economic Development Increase In Real National Income Increase In Real Capita Income Reduction In Income Inequalities Structural Changes Growth Over Long Period Human Development Reduction In Poverty Institutional Development Infrastructural Development

Need of Economic Development Increase In National Income Increase in Per capita income High Standard Of Living More Capital Formation Less Dependence On Agriculture Full Utilization Of National Resources Self-sufficiency Increase In Employment Avenues Solution Of Vicious Circle Of Poverty Formation Of Human Capital

Determinants of Economic Development It depends on:- Size Organization Capacity of an economy Nature of production

Economic Determinants Natural Resources Labour or Human Resources Structural Changes Size Of The Market Capital Formation Capital-output Ratio Scientific And Technical Progress Financial Stability Able Entrepreneurs And Organization Development Planning International Determinants

Non Economic Determinants Desire For Development Spread Of Education And Skill Formation Political Determinants Social Determinants Religious Determinants Freedom From Corruption Law And Order Situation

Distinction between economic growth and economic development Narrow concept Broad concept Quantities Qualitative Continuous changes Discontinuous changes Related with developed nations Related with under developed nations