Econ225 Notes

What is Economic development?
Economic development is the process in which a country’s economy becomes more advanced, richer
and more developed.
We use the term mainly for developing or emerging economies.
Economic development is not just about money. It also includes literacy rate, infrastructure access to
housing and healthcare as an economy develops so does the populations average life expectancy in
the past, we included people’s access to a telephone. We now focus on internet access.
South Korea’s economic development since 1960s has been remarkable in 1960. It was among 10
poorest countries in the world. There was starvation, illiteracy was high and the country had low life
expectancy. Today, South Korea is a developed country. It is now Asia’s 4 th largest economy.
Samsung, Hyundai and LG electronics, 3 multinational South Korean companies are today household
names across the world.
Economic development and Overview

Economic development generally refers to the sustained concerted actions of policymakers and
communities that promote the standard of living and economic health of a specific area.
Economic development implies the process of higher level of productivity in all sectors of
economy. It is a process of stepping up the rate of capital formation that is needed for rapid economic
development.
Economic development depends on 2 sets of factors: (1) economic and (2) non-economic. Two
different approaches to economic development have existed side by side.
Let us take a quick look at the economic factors in the theory of economic development.
Two main approaches to the concept of economic development are (1) Traditional approach and
(2) Growing economy approach.
Traditional Approach
Traditional approaches to economic development policies have been developed from the
perspective of what was necessary to attract and keep businesses in local communities.
This approach defines developments strictly in economic terms. Before 1970s, economic
development was regarded as an increase in real national product of country over a long period of time. A
long run expansion in production was to be achieved by rapid industrialization of the country at the
expense of agriculture and rural development. The growth development at that time mainly meant the
growth or material production.
Traditional approach thus implies sustained annual increase in GNP that is Gross National
Product or GDP that is Gross Domestic Product.
Our grades varying between 5 to 7 percent or more.
Now let us take a look at Growing Economy Approach.
Growing Economy Approach
This approach defines development including improvements in material welfare especially for
persons with lowest income and eradication of mass poverty with the availability of resources and their
distribution. Thus in growing economy approach, human beings are at the center of economic
development.
Non-economic factors let us understand what our non-economic factors. All factors in a country
have particular economic impacts. The norm economic factors present in a society are the elements which
have no direct effect upon the economy of the country such factors are a variety of social features,
religion, ethnicity and social activity.
For instance similarly political elements which do not include economy related activities also
have no direct economic impact and can be classified as non-economic factors. Under development, it is
necessary to understand the term under development while understanding the concept of economic
development. Under development takes place when resources are not used to their full socio-economic
potential. Thus it results that local r regional development which is slower in most cases than it should be.
According to the Planning Commission under developed country is one which is characterized by
coexistence of unutilized and underutilize manpower and exploited natural resources of these
underdeveloped economies, countries which show the tendency of high growth rate are called developing
economies.
To summarize economic development is the development of economic wealth of countries or regions for
the well-being of the inhabitants. It is a process of stepping up the rate of the capital formation that is
needed for rapid economic development.

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What is Economic development?

Economic development and Overview

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