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Indian and Global Economic Development

Indian and Global Economic Development

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Published by vinaysam
Notes on Indian and Global Economic Development for TYBCom students of Ahmednagar College, Ahmednagar
Notes on Indian and Global Economic Development for TYBCom students of Ahmednagar College, Ahmednagar

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Published by: vinaysam on Dec 15, 2010
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Indian And Global Economic Development1
Chapter 1IntroductionEconomic Development and Economic GrowthDefine and explain Economic Development and Economic Growth.Explain the meaning of Economic Development.
Very often the terms economic growth and economic development areused interchangeably, suggesting that they both mean the same thing. In fact,they are different from each other.
Economic Development:
There are two views defining and explaining Economic Development.They are a) Traditional Economic View and b) The New Economic View.
a) Traditional Economic View:
In this view economist considered two facts.A) All modern developed industrial nations were once undeveloped agrariansocieties. B) The then latest experience had shown that the war-torn economiesof Europe could rebuild and modernize their economies in a matter of a fewyears. They could do it because of the Marshall Plan under which U.S.provided a massive financial and technical assistance to them. Prof. Rostow,
constitute a „theory about economic growth.‟ According to Ros
tow, allsocieties pass through the five stages of economic development, viz. a) thetraditional society b) the preconditions for take-off c) take-off into self-sustaining growth iv) the drive to maturity and v) the age of high massconsumption. For the take-off of the economy needs several requirements. Oneof them is domestic and foreign savings to generate investment.Under the Traditional Economic View, economic development isdefined as follows:
‘Economic development is a process whereby an economy’s
eal national income increases over a long period of time.’ (Meier and Baldwin
1957)
According to Meier and Baldwin the „process‟ implies an operation of 
certain forces over a long period and represent certain changes. These changesare divided into two parts a) Changes in factor supplies b) Changes in thestructure of demand. Most of the changes in factor supplies need investments.
b) The New Economic View:
The Third World countries were a part of ahighly integrated and complex international system and that the bestdevelopment policies also can be nullified by external forces over which theless developed countries have no control. This gave birth to a more recentapproach that attempts to combine economic and institutional factors into asocial system model of development.
The new approach is called the „international
-
structuralist‟ model. This
has two major streams of thought. One is the Neo-Marxist view that highlightsthe exploitation of poor countries by the rich countries. The second viewblames the inappropriateness of advice given by international agencies andother experts. Both these streams reject the exclusive emphasis on the growthof GNP. This new approach wants more emphasis to be placed on the neededstructural and institutional reforms so as to eradicate absolute poverty, provide
 
Indian And Global Economic Development2
growing employment opportunities reduces income disparities and raise thelevels of living of the masses. The new economic view goes beyond narroweconomic criteria.Definition of Economic Development under the new view is as follows:
‘Development must therefore be conceived of as a multi
-dimensional process involving changes in structures, attitudes and institutions as well as theacceleration of economic growth, the reduction of inequality and eradication of absol
ute poverty.’ 
(Michael Todaro)
 The above definition suggests that the whole social system has to go throughthe process of economic development. This process involves several changes,which enable the system to move from a situation widely though to beunsatisfactory to a condition of life regarded a better.
Economic Growth:
Prof. Simon Kuznet defines economic growth as follows:
‘It is a long 
-term rise in capacity to supply increasingly diverseeconomic goods to its population, this growing capacity being based onadvancing technology and the institutional and ideological adjustments that it 
demands.’ 
 
This definition suggests
 – 
 1.
 
Indicator of economic growth is the increase in the capacity of theeconomy to produce goods and service.2.
 
An advance technology is necessary for this long-term growth of capacity,.3.
 
Growth calls certain adjustments, both institutionally and ideologically.
Distinction between Economic Development and Economic Growth
Several authors have reversed the term „development‟ for the growth
-p
rocess in developing countries, while the term „growth‟ is used in the context
of advanced or developed countries. There is some logic in doing so. The factthat the problems of underdeveloped countries are concerned with thedevelopment of unused resources, even though their uses are well known. Theproblems of advanced countries on the other hand are related to growth, sincemost of the resources are already known and developed to a considerableextent.
Definitions -
Prof. Simon Kuznet defines economic growth as follows:
„It is a long
-term rise in capacity to supply increasingly diverseeconomic goods to its population, this growing capacity being based onadvancing technology and the institutional and ideological adjustments that it
demands.‟
 Michael Todaro defines economic development as follows:
„Development must therefore be conceived of as a multi
-dimensionalprocess involving changes in structures, attitudes and institutions as well as the

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