The process of development depends on factors like natural resources, human capital,

technology,political economic structure of the country. Determinants of development are

classified into economic factors and non-economic factors.
ECONOMIC FACTORS:
​Economic factors play a very important role in the development of a
country. The aggregate output rises or falls due to changes in them.
● Natural Resources, ​if a country rich in natural resources, it is then able to make
rapid progress in growth. In case a country is deficient in natural resources it is then
normally not in a position to develop rapidly. LCD’s natural resources are
underutilized, unutilized or misutilized. This is one of the reasons for their
backwardness,but presence of rich resources is not a precondition for economic
development. There are countries in the world which do not have abundant
resources, yet they have made rapid progress in growth by technology, new
researches and higher knowledge.
● Capital Formation, ​capital formation refers to the process of adding to the stock of
capital overtime. Stock of capital can increased through 3 different resources such as
(a)​ ​An act of saving​, involves postponing of consumption whether voluntarily or
involuntarily. In developing countries the saving potential is low. Middle income
people spend the resources on consumption items while the rich section of society
spends money on luxury items and therefore little savings is available for investment.
Saving potential does not exceed 13% to 10% of national income which keeps their
stock of capital low.
(b) ​Capital market ​consists of financial institutions like banks, stocks exchanges. In
developing countries, the capital market is less developed.
(c) ​An act of investment,​in less developed countries, meagre savings are available
with households and with the businessmen, is not all channelized for investment in
capital. The businessmen usually hesitate to invest their resources due to political
and social instability, poor roads etc.
● Human Resources, ​if the population of a country is educated, efficient, patriot,
skilled, healthy, it makes significant contribution to economic development, if a
country is overpopulated, labour force is unemployed, uneducated, unskilled,
unpatriotic, it can put serious hurdles on the path of economic development.
● Power, ​the power resources are the foundation of economic development. It's
importance has been changing with the passage of time. There are two types of
sources. ​Commercial​ (oil, gas, coal, hydel, thermal electricity and nuclear)
Non-commercial ​(animal power, fuel, wood, cow dung). In developed countries of
the world, nuclear power and solar energy are being increasingly used for generating
electricity. The sources of energy are helpful in
○ Raising production in all sectors of economy.
○ Quick bridging the development gap.
○ Providing economies of scale.
○ Ensuring high quality standards .
○ Reducing material wastages.
Saudi Arabia, Bahrain are producing energy according to their needs from their own
cheap source (oil)
● The Means Of Transportation And Communication, ​it is an important factor on the
economic growth of a country. If a country is well connected with railroads, seaports
and has a development means of communication it helps in improving the productive
capacity of various sectors of the economy. It also helps in improving the quality and
quantity of goods due to competition and reduction in production cost.