DHARMASHASTRA NATIONAL LAW UNIVERSITY,

Jabalpur (M.P.) 482001

Academic Session (2023-2024)

Economics – III

“The Relation Between Economy and Human Development”

Submitted by: Submitted to:

Vivek Vibhushan Kol Ms. Isha Wadhwa

BALLB/108/21 Assistant Professor

Semester - V Economics

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 ACKNOWLEDGEMENTS

Projects are a very important part of a student’s life in law school. Projects help us explore
the topics and on the topics that we don’t generally get to work on in our normal study
process. Therefore, I am very thankful to my economics lecturer Ms. Isha Wadhwa
Mam, for giving me the topic of “The Relation Between Economy and Human
Development”. By this topic, I was able not only to explore the economic topic but also
the need in Everyday life along with it.

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 TABLE OF CONTENTS

Acknowledgment

Introduction

Research Questions

Research Objectives

Research Hypothesis

Research Methodology

Reference

Factors in economic growth

Human development

Human Development Index

Links between economic growth

Conclusion

Bibliography

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 INTRODUCTION

The relationship between economy and human development is intricate and multifaceted.
Economy refers to the system of production, distribution, and consumption of goods and
services in a society, while human development encompasses the overall improvement in
the well-being and capabilities of individuals.

This connection can be understood through the lens of various key aspects:
1. Income and Poverty: A robust economy can generate higher income levels, which
in turn can enhance people's access to basic necessities such as food, healthcare,
education, and housing. Economic growth is often associated with a reduction in
poverty rates and an improvement in living standards.
2. Employment Opportunities: A thriving economy generally offers more job
opportunities, leading to reduced unemployment rates and increased labor force
participation. Access to gainful employment allows individuals to secure their
livelihoods and contribute to overall economic productivity.
3. Education: A strong economy often leads to increased investment in education.
Higher economic resources can translate to improved access to quality education and
better educational infrastructure. Education equips individuals with skills and
knowledge, enabling them to participate more effectively in economic activities.
4. Healthcare: Economic development can result in improved healthcare systems and
access to medical services. This leads to better health outcomes, increased life
expectancy, and a higher quality of life for the population.
5. Infrastructure Development: Economic growth typically necessitates investment
in infrastructure such as transportation, communication, and energy systems. These
developments enhance connectivity, facilitate trade, and contribute to overall societal
progress.

In essence, the connection between economy and human development highlights the
interplay between material progress and the enhancement of individual well-being. While
economic growth can provide the resources necessary for human development, it must be
accompanied by deliberate policies and strategies that ensure equitable distribution, social
inclusion, and sustainable practices to truly uplift the human condition.

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 RESEARCH QUESTIONS

1. How do different economic models and strategies influence the trajectory of human

development in various countries or regions?

• This question will help us to provide a better understanding of economic models

that influence human development in various countries.

2. How does income inequality mediate the link between economic growth and human

development outcomes?

• This question will provide more information about income inequality that

establishes the link between the economy and human development.

3. How do technological advancements impact the relationship between economic

progress and human development?

• Through this question we understand the role of technologies.

4. To what extent do governmental policies influence the relationship between the

economy and human development?

• This question helps to understand the government policies that create a link between

the economy and human development.

RESEARCH OBJECTIVES

1. To Examine the Correlation Between Economic Indicators and Human Development.

• Investigate the relationship between traditional economic indicators (GDP, GNI,

etc.) and alternative measures of human development (Human Development Index,
Quality of Life Index, etc.)

2. To Analyze the Role of Economic Inequality and Human Development.

• Examine the impact of economic inequality on various dimensions of human

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 development, including education, healthcare, access to basic services, and social
mobility.
3. To Explore the impact of education and skill Development.

• Explore how investments in education, skill development, and lifelong learning

contribute to economic productivity and overall human development.

RESEARCH HYPOTHESIS

Hypothesis 1: “Economic Growth and Human Development”

This hypothesis said that sustained economic growth positively influences human

development indicators, such as education, healthcare, and living standards.

Hypothesis 2: “The link between inequality and Human Development”

This hypothesis suggests that the level of economic inequality within a society has a

significant impact on human development outcomes.

Hypothesis 3: “The meaning of quality of economic growth with Human Development” This
hypothesis tells the quality of economic growth, including its sustainability and inclusivity, is
a more important determinant of human development than just economic growth itself.

RESEARCH METHODOLOGY

1. Research Design: This research will be primarily descriptive and analytical in nature, aiming

to assess the relationship between economy and Human Development

2. Timeframe: The study will cover a specific period (e.g., last 20-30 years) to analyze trends

and changes over time.

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3. Secondary Data: Collect relevant data from government reports, economic journals, legal

documents, and other published sources.

4. Data Analysis: Quantitative Analysis: Use statistical tools like regression analysis to assess

relations between Economy and Human Development.

5. Method: This research is based on Doctrinal Research. The researcher has used a secondary

source of data for the study from the Internet as data from published articles.

REFERENCES

To study the relationship between the Economy and Human Development, you can gather

data from various sources, including:

1. Government Reports and Publications:

• Reports from the Ministry of Finance, Ministry of Commerce and Industry,

and other

• Relevant government departments that detail economic policies, budget

allocations, and government involvement in economic activities.

2. Economic Surveys:

• The Economic Survey of India, published annually by the government,

provides
valuable insights into the state of the Indian economy, including trends, challenges,
and government interventions.

3. Academic Journals and Research Papers:

• Academic research papers and articles in economics, law, and political science

journals can provide in-depth analyses and empirical studies on the subject.

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 Chapter 2

Factors in economic growth

The components of production are the inputs required by businesses to create their
products and services. This enables them to generate income. These concepts have their
roots in neoclassical economics, which blended traditional economic theories with other
concepts like the concept of labor. The four factors of production are land, labor, capital,
and entrepreneurship, as was already mentioned.
Land: Most people automatically associate "land" with "agricultural land" when they
think of it. It's true, but it's not the only component of this factor. In addition to natural
resources, land can also refer to commercial property and renewable resources like
forests. This category also includes the earth's natural resources that are used by
producers. Among these sources are:

 Oil and gas

 Coal
 Silver, copper, and other metals

Generally speaking, one of the most crucial production factors is land. Land is more
important to some industries than others. Land is a key component of production, but it
is used less by businesses that rely on technology and automation.

Labor: The people and the effort they put forth are considered labor because they are in
charge of the entire process of producing goods and services. These people consist of
managers, salespeople, factory workers, and engineers who create the production
machinery. As a result, it has a wide range of forms.

People are paid for their time and effort, and the amount they receive is based on the
skills they contribute. People with less education and training typically make less money
than those who are highly educated and skilled.

Capital: Although the majority of people believe capital to be cash, the term is actually
used to refer to a variety of other assets. In addition to manufacturing facilities,
machinery, tools, and other equipment used in the production process, capital goods are
also regarded as capital. Along with large machinery, the term "capital" can also refer to
a fleet of trucks.

Corporations can access capital as the economy grows and thrives, allowing them to
spend and invest while continuing to turn a profit. However, they must reduce expenses
in order to protect capital in order to maintain profitability. All of this is required to
make sure that they can keep introducing new goods and services to the market.

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Entrepreneurship
The fourth factor, entrepreneurship, includes the creative thinkers and trailblazers who created
the entire production chain. To conceptualize, create, and produce the good or service, the
entrepreneurs combine all the other production factors. Any technological advancement in the
economic system, which has been demonstrated to be a significant driver of economic
growth, is driven by them.
The creation of a business plan is absolutely necessary for entrepreneurs to be successful.
This is a document that business owners use to outline the operations, goals, and objectives of
their organization. Entrepreneurs should look for resources, hire staff, and access financing
once the business plan has been created.1

Chapter 3

Human Development

The calculation of the Human Development Index was inspired by the recent search for an
alternative to GNP as a gauge of economic development. The first Human Development
Report, produced by the capable leadership of Mahbub ul Haq and released in 1990, was the
vehicle through which the United Nations Development Program introduced the HDI. Over
time, the measure has grown and improved, and numerous related Human Development
indices, such as the Gender-Related Development Index (GDI), the Gender Empowerment
Measure (GEM), and the Human Poverty Index (HPI), have been created and included in
subsequent Human Development Reports, which are released annually by UNDP.
People are a nation's true wealth, as stated in the opening sentence of the first Human
Development Report from 1990: "People are the real wealth of a nation.". The Human
Development Report has had a significant influence on policies all over the world by
providing ample empirical evidence for this claim as well as a fresh perspective on and
method for measuring development.

1
Full Bio, Why Are the Factors of Production Important to Economic Growth? (Aug. 11, 2023)

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"The basic purpose of development is to enlarge people's choices. In principle, these
choices can be infinite and can change over time. People often value achievements that
do not show up at all, or not immediately, in income or growth figures: greater access to
knowledge, better nutrition and health services, more secure livelihoods, security against
crime and physical violence, satisfying leisure hours, political and cultural freedoms and
sense of participation in community activities. The objective of development is to create
an enabling environment for people to enjoy long, healthy, and creative lives."
Mabub ul Haq
(1934-1998)
Founder of the Human Development Report

Human Development Index

A long and healthy life, access to knowledge, and a reasonable standard of living are the
three main dimensions of human development that are captured by the Human
Development Index (HDI).

The HDI uses four essential metrics:

1. Life expectancy at birth - to gauge the likelihood of a long and healthy life
2. Average years of schooling - to gauge the older generation's
3. Access to knowledge gross national income (GNI) per capita - to gauge the
4. Standard of living life expectancy at birth - to gauge the likelihood of a long and
healthy life

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The HDI is determined in two steps:

1. Creating indices for every one of the four metrics

The four metrics' values are each first normalized to an index value ranging from 0 to 1. To
achieve this, the UNDP establishes "goalposts" that represent the upper and lower bounds for
each metric, as shown in the table.
The dimension (indices) value for each metric is computed using the global maximum and
minimum values as well as the actual value for a particular country as follows:
“Dimension index= actual value - minimum value ÷ maximum value - minimum value”
Therefore, the dimension index is 1 for a country that achieves the highest value and 0 for a
country that achieves the lowest value.

2. Combining the four metrics to generate the HDI.

The HDI is derived by aggregating each of the individual indices after they have each been
determined.
The geometric mean (equally weighted) of life expectancy, education, and GNI per capita is
used to calculate the HDI as follows:
HDI = (I Health* I Education * I Income)1/3
The two education indices, mean years of schooling and expected years of schooling are
combined to form the education dimension, which is the arithmetic mean of these two
indices.2

2
Max Roser, Human Development Index (HDI), Our World in Data

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 Chapter 4

Links between economic growth

This section outlines the ways that advancements in human development can have a positive
impact on the economy. "Healthy, educated people increase the productivity of an economy."
Making workers, especially those who are poorer, more productive by enhancing their
nutrition, health, and education results in some of the most obvious economic benefits of
human development. Access to education may also improve the equity of income
distribution. Women typically experience higher overall returns from education than men.
The relationship between economic growth and human development has the following major
components:

 Education: It is a crucial component of human development, and a healthy economy can

provide the means for high-quality instruction. Education gives people the knowledge and
skills they need to participate in the economy more successfully and advance their general
well-being.

 Health: Greater access to medical services, better healthcare systems, and better health
outcomes can all result from economic growth. A fundamental requirement for human
development is good health because it raises output and quality of life in general.

 Employment: A healthy economy usually generates job opportunities, lowering the rates
of underemployment and unemployment. Gainful employment boosts people's self-
esteem and general well-being in addition to promoting economic growth.

 Inequality: Income and wealth distribution have an impact on the relationship between
human development and the economy. High levels of inequality can prevent people from
accessing opportunities and resources that are necessary for their development.

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 CHAPTER 5
Conclusion

The focus has shifted from the "quantity of growth" to the "structure and quality of
growth" as a result of the focus on human development and the creation of the Human
Development Index. Today, we understand that "the success of economic growth must
ultimately be judged by what it does to our lives and the level of happiness and freedom
we can experience. In general, it is impossible to separate the 'end' of advancing human
potential from the ' means' of enhancing freedom and well-being. Governments are now
more and more aware that economic growth can become uneven and flawed if they don't
take corrective action. An economy with no jobs, no voice, no roots, and no future would
result from this.
The promotion of solid connections between economic development and human
development is necessary to avoid these pitfalls. Instead of providing few options for the
majority of people or many options for a select few, economic growth should result in
more options for everyone. However, waiting for economic growth to inevitably benefit
the poor is never sufficient. Instead, it is imperative that political and economic
policymakers prioritize human development and the reduction of poverty. And even after
they have been painstakingly established, links between economic growth and human
development must be safeguarded against being destroyed by abrupt changes in political
power or market forces.

GLOSSARY
1. Human Development Index: It is a system where we can measure the
development of the Human.
2.

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