[To Index]

BA LLB Economics Semester – 3

Module 1(a) and 1(b)

Click the questions to navigate:

1. Distinguish between Economic growth and development

2. The factors affecting economic growth and development
3. Measurement of economic growth in terms of per capita income
4. Features of less developed economy
5. The fundamentals of the Harrod-Domar model
6. Vicious cycle of under development
7. Theories of development (Short notes)
8. Types of Economies

Follow Law News Channel in WhatsApp for further notes:

https://whatsapp.com/channel/0029Vam3JEkJENxwdJDDQn0s
[To Index]

1. Distinguish between Economic growth and development

Economic growth and development are often used interchangeably, but they represent distinct
concepts. Economic growth is a narrow concept, focused on increasing national income
and output, while economic development is a broader concept that encompasses
qualitative improvements in living standards. While economic growth is a prerequisite for
economic development, it does not guarantee it.
Economic growth is typically measured as an increase in real Gross National Product (GNP)
or Gross Domestic Product (GDP) over a sustained period. These measures quantify the total
value of goods and services produced in an economy. A rise in national income, particularly on
a per-capita basis, can signify progress toward a higher standard of living. However, GNP and
GDP are criticised as measures of growth or development because they do not account for
population changes, the distribution of income, environmental degradation, or the depletion of
natural resources.
Economic development, on the other hand, focuses on improving people's well-being and
encompasses factors like increased life expectancy, reduced infant mortality, improved
literacy rates, and access to basic necessities like healthcare, sanitation, and education.
It's a multi-dimensional process involving changes in social structures, attitudes, and national
institutions, along with the reduction of inequality and the eradication of poverty.
Here are some key differences between economic growth and economic development:
• Scope: Economic growth is a single-dimensional concept focused on quantitative
increases in national income. Economic development is multi-dimensional,
encompassing qualitative and quantitative changes across social and economic aspects
of a nation.
• Focus: Economic growth emphasizes increasing production and income. Economic
development prioritises improving people's quality of life and overall well-being.
• Sustainability: Economic growth may not be sustainable in the long run if it depletes
natural resources or leads to environmental damage. Economic development strives for
sustainable and inclusive growth that benefits all segments of society.
The relationship between economic growth and development is complex. While economic
growth can provide the resources needed for development initiatives, it's not enough on its
own. Equitable distribution of income, investments in education and healthcare, and
sustainable environmental practices are crucial for translating economic growth into
meaningful development. In essence, economic development aims for a holistic
improvement in a nation's well-being, going beyond just numerical increases in income.

Follow Law News Channel in WhatsApp for further notes:

https://whatsapp.com/channel/0029Vam3JEkJENxwdJDDQn0s
[To Index]

2. The factors affecting economic growth and development

Economic growth is a sustained increase in a country's national income, measured by the

growth in total or per-capita income. Economic development is a broader concept,
encompassing not just economic growth, but also qualitative social changes that improve
people's quality of life. These might include reductions in poverty and inequality, or
improvements to health, hygiene, education, and environmental standards. The factors
affecting economic growth and development are diverse and interlinked, but can be grouped
into economic and non-economic factors.
Economic Factors Affecting Economic Growth & Development
• Natural Resources: The quantity and quality of natural resources influence a country's
economic development. The discovery of new natural resources accelerates growth.
• Human Resources: The size and quality of a country's human resources also affects
economic development. Education and training create skilled manpower which helps
to achieve higher growth.
• Capital Formation: Higher rates of savings and investment are crucial for economic
growth. Domestic savings are the main source of investment funds, but some countries
also rely on foreign aid.
• Technology: Advances in technology can lead to higher productivity and efficiency.
However, technological progress depends on research and development, and there may
be constraints, such as a shortage of capital or skilled labour, which limit the application
of new technologies.
Non-Economic Factors Affecting Economic Growth & Development
Social and cultural values can have a deep impact on a nation. These might include values,
attitudes, beliefs, and institutions which affect people's willingness to work, save, and invest.
They might also include social and political stability, or the level of corruption.
Measurement of Economic Growth & Development
There are several different measures which can be used to assess economic growth and
development.
Measures of Economic Growth
• Increase in Real GNP: Measures the total value of goods and services produced in an
economy. It is used to measure economic growth over a period of time. GNP or GDP,
however, have several limitations as measures of economic growth or development:
they do not take account of changes in population, the depletion of natural resources,
or environmental damage. They also provide no information about the distribution of
income.
• Increase in Real Per Capita Income: Takes into account changes in population.
Higher national income with a static or slower-growing population results in higher per-
capita income.

Follow Law News Channel in WhatsApp for further notes:

https://whatsapp.com/channel/0029Vam3JEkJENxwdJDDQn0s
[To Index]

Measures of Economic Development

• Physical Quality of Life Index (PQLI): Accounts for a broader range of factors
affecting the quality of life, including life expectancy, infant mortality, and literacy
rates.
• Human Development Index (HDI): Similar to the PQLI, the HDI considers health
(life expectancy), education, and standard of living.
Other Indicators of Development
The level of development can also be assessed by looking at other factors, such as:
• Levels of national and per-capita income. Developed countries have high national and
per-capita income, while developing countries have lower national and per-capita
income.
• Rates of capital formation. Developed countries have higher rates of capital formation
than developing countries.
• Investment in health and sanitation. Developed countries have higher investment in
infrastructure such as hospitals and sanitation facilities.
• Birth and death rates. Developed countries tend to have low birth and death rates, and
low infant mortality, while developing countries have higher birth and death rates, and
high infant mortality.
Factors Affecting Capital Formation
There is great importance of capital formation for economic development. Low levels of
savings and investment create a vicious cycle which traps countries in poverty.
Demand-Side Factors Limiting Capital Formation
Low levels of productivity result in low per-capita income and low levels of aggregate demand.
There is, therefore, little incentive for firms to invest and increase production.
Supply-Side Factors Limiting Capital Formation
Low levels of income mean that people have little capacity to save. This leads to low levels of
investment and low productivity, which in turn leads to low incomes.
This vicious cycle of poverty can be broken by increasing savings and investment, which can
be achieved through government intervention or foreign aid.

Follow Law News Channel in WhatsApp for further notes:

https://whatsapp.com/channel/0029Vam3JEkJENxwdJDDQn0s
[To Index]

3. Measurement of economic growth in terms of per capita income

Economic growth can be measured in terms of changes in real per-capita income. Real
per-capita income is a measure of the average income earned by each person in a country,
adjusted for inflation. It is calculated by dividing the country's real national income by its
population.
Increases in real per capita income are generally seen as a positive sign, as they suggest
that people have more money to spend on goods and services. However, it is important to note
that per capita income is only one measure of economic growth, and it does not tell us
everything about the economic well-being of a country. For example, it does not take into
account the distribution of income or the quality of life.
Despite these limitations, per-capita income remains a widely used measure of economic
growth, and it can be a useful tool for comparing the economic performance of different
countries.
A country can increase its real per-capita income in two ways:
• By increasing its national income: This can be achieved through a variety of means,
such as increasing productivity, investing in education and training, or developing new
technologies.
• By decreasing its population: If the population decreases faster than national income,
per capita income will increase.
Limitations of Per Capita Income as a Measure of Growth & Development
While useful for comparing the economic performance of different countries, per-capita
income has several limitations as a measure of economic growth and development. These
include:
• It does not take into account the distribution of income. A country with a high per capita
income may still have a large number of poor people if the income is not evenly
distributed.
• It does not take into account the quality of life. A country with a high per-capita income
may have a low quality of life if the environment is polluted, crime is high, or there is
a lack of access to basic services such as healthcare and education.
• It does not account for other important indicators such as the Human Development
Index. A country can have high per capita income but a lower HDI if literacy rates are
low or life-expectancy is short.
Because of these limitations, it is important to use a variety of measures when assessing
economic growth and development.

Follow Law News Channel in WhatsApp for further notes:

https://whatsapp.com/channel/0029Vam3JEkJENxwdJDDQn0s
[To Index]

4. Features of less developed economy

Less developed economies (LDCs), also known as developing economies, share a number of
common features, including low levels of income, low levels of human development, high
levels of poverty and inequality, a dependence on agriculture, and low levels of
industrialisation. These characteristics create a vicious cycle which can trap countries in
poverty.
Key Features of Less Developed Economies
• Low Per Capita Income: A key feature of LDCs is low per capita income, resulting
from low productivity and a high proportion of the population engaged in low-
productivity activities such as subsistence agriculture. The low per capita income leads
to low levels of savings and investment, which in turn constrains economic growth. In
India in 1992-93, per capita income was 40 times lower than in the USA.
• High Dependence on Agriculture: The majority of the population in LDCs is engaged
in agriculture, often at a subsistence level. The agricultural sector is often characterised
by low productivity due to factors such as fragmented land holdings, limited access to
modern technology, and dependence on rainfall. The reliance on agriculture makes
LDCs vulnerable to fluctuations in commodity prices and weather patterns, which can
have a significant impact on their economies.
• Low Levels of Industrialisation: LDCs have small industrial sectors and rely heavily
on imports of manufactured goods. The industrial sector is often hampered by a lack of
capital, skilled labour, and access to technology. This makes it difficult for LDCs to
diversify their economies and move away from their dependence on agriculture.
• Low Levels of Savings & Investment: Low per capita income results in low levels of
savings. This creates a vicious cycle of poverty, as low savings lead to low investment,
which in turn leads to low productivity and low income. LDCs struggle to mobilise
sufficient domestic capital for investment, and often rely on foreign aid or investment
to supplement domestic savings.
• High Population Growth Rates: High birth rates and declining death rates, as a result
of improvements in healthcare and sanitation, often lead to high population growth in
LDCs. Rapid population growth can put a strain on resources, leading to lower living
standards and increasing the challenge of creating enough jobs to absorb the growing
labour force.
• High Levels of Unemployment & Underemployment: Widespread unemployment
and underemployment are characteristic of LDCs. The supply of labour exceeds
demand, resulting in high levels of unemployment, particularly among young people.
In addition, many people are engaged in low-productivity, informal sector activities
where they are underemployed.
• Low Levels of Human Development: The Human Development Index (HDI) is a
composite measure of health (life expectancy), education, and standard of living. LDCs
typically have low levels of human development, reflecting poor health, low levels of

Follow Law News Channel in WhatsApp for further notes:

https://whatsapp.com/channel/0029Vam3JEkJENxwdJDDQn0s
[To Index]

education, and inadequate living standards. In India, for example, literacy rates and life
expectancy are significantly lower than in developed countries.
• Technological Backwardness: LDCs often lack access to modern technologies and
production methods. The use of outdated technology results in low productivity and
makes it difficult for LDCs to compete in global markets.
• Lack of Infrastructure: LDCs often have inadequate infrastructure, such as roads,
electricity, and telecommunications. Poor infrastructure increases the cost of doing
business and makes it difficult to attract investment.
• Dualistic Economies: Many LDCs have dualistic economies, with a modern, urban
sector existing alongside a traditional, rural sector. The modern sector is typically more
productive and connected to the global economy, while the rural sector is characterised
by subsistence agriculture and low productivity. This dualism can lead to significant
inequalities in income and wealth.
• Vicious Cycle of Poverty: The features of LDCs are interlinked and create a vicious
cycle of poverty. Low per capita income leads to low levels of savings and investment,
which in turn leads to low productivity and low income. This cycle can be difficult to
break without significant investment in human capital, infrastructure, and technology.

Follow Law News Channel in WhatsApp for further notes:

https://whatsapp.com/channel/0029Vam3JEkJENxwdJDDQn0s
[To Index]

5. The fundamentals of the Harrod-Domar model

The Harrod-Domar model, developed independently by Roy Harrod in 1939 and Evsey Domar
in 1946, is a Keynesian model of economic growth. It explains how economies can achieve
stable growth by equating the actual growth rate with the warranted growth rate and the
natural rate of growth. The model has been particularly influential in guiding development
policies, especially in countries like India during its early Five Year Plans.
Key Variables & Assumptions
• Savings: The model posits that savings are crucial for economic growth. Higher savings
translate into higher investment, which in turn fuels growth.
• Investment: Investment plays a central role in increasing the capital stock and driving
economic growth.
• Capital Output Ratio: This ratio (denoted as 'k' in the model) measures the
productivity of capital, indicating how much output is generated from a given amount
of capital. A lower capital output ratio implies higher productivity and greater efficiency
in using capital.
• Rate of Growth: The model expresses the rate of economic growth as the ratio of
savings to the capital output ratio.
Types of Growth Rates
The Harrod-Domar model distinguishes between three types of growth rates:
• Actual Growth Rate (G): This measures the actual increase in a country's real national
income or output over a given period, typically a year.
• Warranted Growth Rate (Gw): This represents the growth rate required to keep the
economy in equilibrium, where all savings are channeled into investment. It is the rate
at which the economy can grow without generating unsustainable expansions or
recessions.
• Natural Growth Rate (Gn): This is the maximum growth rate allowed by the available
resources and technological progress, primarily determined by factors such as
population growth and technological advancements.
Equilibrium Growth and Instability
The model highlights the importance of achieving equilibrium growth, where the actual growth
rate (G) aligns with the warranted growth rate (Gw) and the natural growth rate (Gn).
Key Relationships:
• Gw = S/k: The warranted growth rate is equal to the savings rate (S) divided by the
capital output ratio (k).
• G = Gw = Gn: For stable growth, the actual growth rate should match both the
warranted and natural growth rates.
Consequences of Disequilibrium:

Follow Law News Channel in WhatsApp for further notes:

https://whatsapp.com/channel/0029Vam3JEkJENxwdJDDQn0s
[To Index]

• G > Gw: If the actual growth rate exceeds the warranted rate, it can lead to inflationary
pressures and unsustainable economic expansion.
• G < Gw: When the actual rate falls below the warranted rate, it can result in
recessionary pressures and unemployment.
• Gw > Gn: If the warranted rate surpasses the natural rate, it leads to a growing
proportion of unemployment as the economy's capacity to create jobs falls short of the
growth in the labor force. This is known as secular stagnation.
• Gw < Gn: Conversely, if the warranted rate is lower than the natural rate, it leads to
labor shortages and inflationary pressures as the demand for labor exceeds the supply.
Policy Implications
The Harrod-Domar model provides crucial policy insights, particularly for developing
economies:
• Promoting Savings: Encouraging higher savings rates is essential for increasing
investment and boosting economic growth.
• Enhancing Productivity: Policies aimed at lowering the capital output ratio by
improving efficiency, adopting modern technology, and investing in education and
skills development are critical for sustainable growth.
• Addressing Population Growth: Managing population growth to ensure it aligns with
the economy's capacity to create jobs and generate income is vital for avoiding
unemployment or inflationary pressures.
Criticisms and Limitations
Despite its significance, the Harrod-Domar model has faced criticisms:
• Unrealistic Assumptions: It relies on assumptions like a fixed capital output ratio,
which doesn't hold in the real world where technological progress can influence this
ratio.
• Neglect of Other Factors: It doesn't consider factors such as technological change,
government policies, and structural changes in the economy, which can impact growth.
The Harrod-Domar model is a valuable framework for understanding the dynamics of
economic growth. It underscores the importance of saving, investment, and the efficient use of
capital for achieving stable and sustained growth. However, its limitations necessitate
considering other factors and more nuanced models for formulating comprehensive
development strategies.

Follow Law News Channel in WhatsApp for further notes:

https://whatsapp.com/channel/0029Vam3JEkJENxwdJDDQn0s
[To Index]

6. Vicious cycle of under development

The vicious cycle of poverty is a concept that describes how low income levels in developing
countries create a self-perpetuating cycle of poverty. The concept was popularized by
Ragnar Nurkse, who described it as a circular constellation of forces that keep a poor country
in a state of poverty.
The vicious cycle of poverty can be understood from both the demand and supply sides of
capital formation:
Demand Side:
• Low Production: Developing countries often experience low levels of production due
to factors such as limited capital, outdated technology, and low productivity.
• Low Income: This low production results in low per capita income, leaving people
with limited purchasing power.
• Low Demand: The reduced purchasing power leads to low demand for goods and
services, constraining market size and discouraging investment.
• Limited Investment: The small market size and low demand discourage investment,
further perpetuating low production and income levels.
Supply Side:
• Low Savings: Low per capita income results in low savings rates as individuals
struggle to meet their basic needs.
• Low Investment: Limited savings lead to low levels of investment as there are
insufficient funds available for businesses to expand and improve.
• Low Capital Formation: The low investment rate hinders capital formation,
perpetuating low productivity and limited economic growth.
Key Elements of the Vicious Cycle:
• Poverty: The cycle begins and ends with poverty, highlighting its self-perpetuating
nature.
• Low Production and Productivity: Low levels of production and productivity are
both a cause and consequence of poverty, perpetuating the cycle.
• Rapid Population Growth: High population growth rates can exacerbate poverty by
putting further strain on limited resources and increasing the dependency burden.
• Low Per Capita Income: Low income levels restrict people's ability to save, consume,
and invest, trapping them in poverty.
• Limited Market Size: The small size of the market discourages investment and limits
opportunities for economic expansion.

Breaking the Vicious Cycle:

Follow Law News Channel in WhatsApp for further notes:

https://whatsapp.com/channel/0029Vam3JEkJENxwdJDDQn0s
[To Index]

Escaping the vicious cycle of poverty requires a multifaceted approach:

• Rapid Economic Growth: Promoting rapid economic growth can boost income levels,
increase savings and investment, and create employment opportunities.
• Investing in Human Capital: Investing in education, healthcare, and skills
development can enhance productivity and create a more skilled workforce, driving
economic growth.
• Promoting Industrial Growth: Developing a vibrant industrial sector can generate
employment, boost production, and create opportunities for technological
advancement.
• Agricultural Development: Increasing agricultural productivity and incomes is crucial
in countries where a large proportion of the population depends on agriculture.
• Infrastructure Development: Investing in infrastructure, such as transportation,
energy, and communication, can improve connectivity, reduce costs, and attract
investment.
Breaking the vicious cycle of underdevelopment requires a comprehensive strategy that
addresses both the demand and supply side constraints and focuses on creating a virtuous cycle
of higher income, savings, investment, and productivity.

Follow Law News Channel in WhatsApp for further notes:

https://whatsapp.com/channel/0029Vam3JEkJENxwdJDDQn0s
[To Index]

7. Theories of development (Short notes)

Theories of Development
Theories of development aim to explain the process of economic growth and transformation in
developing countries. These theories offer insights into the factors that contribute to
underdevelopment and provide frameworks for formulating policies to promote economic and
social progress. Here are some prominent theories of development:
1. Harrod-Domar Model
• Developed independently by Roy Harrod (1939) and Evsey Domar (1946).
• This Keynesian model emphasizes the role of saving and investment in driving
economic growth.
• It posits that the rate of growth is determined by the savings rate divided by the
capital-output ratio.
• A higher savings rate leads to increased investment, which expands the capital stock
and generates economic growth.
• The model highlights the importance of achieving equilibrium growth, where the
actual growth rate aligns with the warranted and natural growth rates to avoid economic
instability.
• The Harrod-Domar model has been influential in shaping development policies,
such as India's Five Year Plan (1951-1956).
• However, it has been criticized for its unrealistic assumptions, such as a fixed capital-
output ratio and the neglect of other crucial factors like technological change and
government policies.
2. Solow Model
• Developed by Robert Solow in 1956.
• This neoclassical growth model builds on the Harrod-Domar model but introduces
technological progress as a key driver of long-term economic growth.
• The Solow model suggests that increasing capital accumulation alone cannot sustain
long-term growth. Eventually, economies reach a steady state where growth is
determined by technological progress.
• The model emphasizes the importance of investing in education, research and
development, and technological advancements to achieve sustained economic
growth.
3. Joan Robinson's Model
• Joan Robinson's growth model, presented in her book "The Accumulation of Capital",
focuses on the role of income distribution and its impact on capital accumulation
and economic growth.

Follow Law News Channel in WhatsApp for further notes:

https://whatsapp.com/channel/0029Vam3JEkJENxwdJDDQn0s
[To Index]

• Her model analyzes the dynamics between workers and entrepreneurs, and their
respective savings and investment behaviour.
• Robinson's theory highlights the importance of addressing income inequalities to
ensure sustained economic growth. She argues that a more equitable distribution of
income can lead to higher savings, investment, and ultimately, faster economic growth.
• The model emphasizes the need for development planning in underdeveloped
countries to enlarge the capital stock and address the problem of excess labour
supply.
4. Balanced Growth Theory
• Associated with economists like Ragnar Nurkse and Paul Rosenstein-Rodan.
• This theory advocates for simultaneous investments across various sectors of the
economy to create a balanced and integrated development process.
• The proponents of balanced growth argue that investing in a single sector or a few
sectors in isolation will lead to bottlenecks and limit the overall growth potential.
• They emphasize the importance of creating a diversified industrial structure and
fostering interdependence among different sectors to stimulate demand, expand
markets, and achieve sustained growth.
• Rosenstein-Rodan used the example of a shoe factory to illustrate the balanced growth
theory. If a large shoe factory is started in a region with a significant number of
unemployed workers, it will create demand for other industries as the workers spend
their wages. This will lead to a "big push" for industrialization and overall economic
growth.
• Nurkse highlighted the "vicious circle of poverty" which traps underdeveloped
countries in a low-income equilibrium.
• He argued that balanced growth, through government intervention and investments
in social overhead capital, is necessary to break this cycle and stimulate demand and
investment.
5. Unbalanced Growth Theory
• Proposed by economists like Albert Hirschman.
• This theory argues that deliberately creating imbalances in the economy can be a
more effective strategy for development.
• Instead of investing in all sectors simultaneously, Hirschman suggested focusing on
strategic sectors that have the potential to create strong forward and backward
linkages.
• These linkages would then stimulate investment and growth in other sectors, leading
to a more dynamic and self-sustaining development process.
• For example, investing in the steel industry would create demand for iron ore and coal
(backward linkages) and encourage the development of industries that use steel as an
input (forward linkages).

Follow Law News Channel in WhatsApp for further notes:

https://whatsapp.com/channel/0029Vam3JEkJENxwdJDDQn0s
[To Index]

• Unbalanced growth theorists believe that resource constraints and lack of

entrepreneurial capacity in developing countries make it more efficient to
concentrate investments in key areas to maximize growth.
These are just a few of the many theories of development. The choice of development strategy
depends on a country's specific circumstances, including its resource endowment, institutional
capacity, and level of development. It's important to note that these theories are not mutually
exclusive and can be combined or adapted to suit a particular country's needs and context.

8. Types of Economies

The purpose of any economy is to satisfy human wants using limited resources. Different
economies can be categorised by various criteria, including:
• Ownership and control of resources.
• Level of development.
Types of Economies Based on Ownership and Control of Resources
Economies can be classified based on ownership and control of resources. These include
Capitalist or free enterprise economy, Socialist or centrally planned economy and Mixed
economy.
Capitalist or free enterprise economies are the oldest form of economy. They advocate
minimum government policy, also known as laissez faire, meaning 'leave free'. The main
features of a capitalist economy are:
• Private property: individuals have the right to own property and no restriction on the
ownership of land.
• Freedom of enterprise: Individuals are free to choose any occupation and businesses
are free to acquire resources and use them for the production of any commodity.
• Consumer's sovereignty: Consumers are like a king and have full freedom to spend
their income on goods and services.
• Profit Motive: The guiding principle in capitalism. Entrepreneurs are motivated to
maximise profits by minimising cost of production.
• Competition: There are no restrictions on the entry and exit of firms.
• Importance of demand and prices: The forces of demand and supply in an industry
determine commodity prices.
• Absence of government interference: The price system plays an important role in
coordinating agents.
Socialist or centrally planned economies are centrally planned where all the productive
resources or factors of production are owned and controlled by the government. The main
features of a socialist economy are:

Follow Law News Channel in WhatsApp for further notes:

https://whatsapp.com/channel/0029Vam3JEkJENxwdJDDQn0s
[To Index]

• Collective Ownership of means of Production: The means of production are owned

by the government on behalf of the people.
• Social Welfare Objective: The decisions are taken by the government at macro level
with the objective of maximization of social welfare.
• Central Planning: Economic planning authority keep national priorities and
availability of resources in mind and allocate resources.
• Reduction in inequalities: By abolishing the inequalities of income and wealth the
socialist economy is able to reduce the inequalities of incomes.
• No class conflict: There is no class conflict as every person is a worker.
Mixed economies combine the best features of capitalism and socialism. In mixed economies:
• Co-existence of public and private sectors: The private sector consists of production
units that are owned privately and the public sector generally demarcated areas of
economic activities.
• Individual Freedom: Individuals take up economic activities to maximise their
personal income.
• Economic Planning: The government prepares long-term plans and decides the roles
to be played by the private and public sectors.
• Price Mechanism: Prices play a significant role in the allocation of resources.
The Indian economy is considered a mixed economy because of well-defined areas for
functioning of public and private sectors and economic planning. Other mixed economies
include the USA and the UK.
Types of Economies Based on Level of Development
Economies can also be classified based on the level of development as developed and
developing economies.
Developed countries are rich and have a high standard of living. They have the following
characteristics:
• High national and per-capita income.
• High savings and investment.
• Educated human resources.
• Low infant mortality.
• Developed industrial and social infrastructures.
Developing countries are also called underdeveloped, backward or poor countries. They have
the following characteristics:
• Low per capita income and low national and per capita income.
• Low savings, investment and capital formation.

Follow Law News Channel in WhatsApp for further notes:

https://whatsapp.com/channel/0029Vam3JEkJENxwdJDDQn0s
[To Index]

• Backward agricultural and industrial sectors.

• They export primary agricultural products.
• Low standard of living and poor health and sanitation.
• High infant mortality and poor infrastructure.

Follow Law News Channel in WhatsApp for further notes:

https://whatsapp.com/channel/0029Vam3JEkJENxwdJDDQn0s