Chapter-1 — Devetoping py 3 veloping Economy and its C1 i y and its Characteristies (1) Long term rocess. Economic growth ; Gnomic growth is a long run process involving a period of decades. A short term jj ere economic yom ease in national income for a few years is not considered an | income, §, 7 is - ita income. Thies Ce onOMC Browth is accompanied by substantial rise in than the rate of growth ot papain, possible only if the real growth in income is higher over a long period of time. (3) Rise in_produetivity, 5; : productive seevity. oductive capacity vos the coon Brouth is always associated with substantial rise in Uma cee Tise in real output can be achieved by proper utilization of nat jor ural and hum sectors ofthe cone ‘an Fesources and better techniques of production in all (4) Greater equality, Th. F There should ity i oe reduction of unemployment in the cine equality in the distribution of income and nt Economie growth ier i epeotl aS We have stated earlier, isthe production of more goods and services : g ; demand for goods and services. The aggregate demand can be increased if there is additional spending by households, by private firms for investment, by government purchases of goods | and services and exports minus imports, Economic growth and the production possibility curve Economic growth means a sustained increase in the real value of production of goods and services in a period of time. When economic growth occurs in an economy, it will cause an upward shift to the right in the production possibility curve as is shown in the figure below: The Production possibility curve (PPC!) shows the different maximum possible combination of quantities of capital and consumer goods which it can produce with a given amount of productive resources like, land, labour and capital equipment and existing state of technology. Now if there is increase in the quantity of production of both these goods i.e., consumer goods and capital goods with the existing productive resources or with any improvement in technology or by some combination of both, it will shift the production possibility curve (PPC?) outward to the right. The upward shift of PPC? shows that the economy's real capacity to produce has increased. Benefits of economic growth The main benefits of economic growth are: andard of living of the people. rand capital goods. (i) Ithelps in raising the material st ji) _Itallows the economy to have more consuine i4 a Leomontes of Pakistan iii) It increases employment opportunities iv) It reduces government cost associated with unemployment benetits, medical aid ete Costs of economic growth: ‘The costs of economic growth are (a) air and water pollution (b) noise (e) i) As more goods are manufactured, it produc ete tra Jams (d) rural and urban congestion (¢) smoke (f) ugly landscapes (42) garb (er and air ete reduces the quality of life. ii) The pollution of w es our scarce non-renewable iii) The consumption of many goods and services redu resources such as gas, oil, minerals ete 3. WHAT IS ECONOMIC DEVELOPMENT? onomie development” is, income so that ‘The term ‘economic a fundamental goal of any nation. © 's per capita consumption, production its people can enjoy the benefits of improved material. wellbei development’ is comprehensive in its scope as compared to economic growth. ‘The term ‘economic development’ signifies both economic growth as well as structural changes in the * economy. It is growth plus structural changes. Thus the term economic growth signify only rise in real national income and per capita incomes; Whereas the term economic development . is the indicator of rise in real national income and per capita incomes along with the following structural changes in the economy. In the course of economic development, its Economic development the process of lifting a natio (1) Changing occupational structure. occupational structure undergoes a change. As the level of economic development rises, the percentage share of labour working in primary sector (farming, fishing mining, food ing, population in stuffs etc). begins to decline; whereas the percentage share of worl it S. secondary, sector (manufacturing portion of the economy) incre: (2) Changing sectoral structure of national output. In the process development, there takes place a visible change in the relative contributions of primary, secondary and tertiary sector (services and commerce portion of an economy such as trade transportation finance, etc) in the generation of national output. The % share of primary sector in the national output falls and the share of secondary and tertiary sectors gradually goes up. (3) Changing structure of industrial production. In the course of economic development, industrialization takes place in the country. The proportio of capital goods in the total industrial output rises and that of consumer goods declines. (4) Changing structure of foreign trade. As the country develops economically, the share of primary goods in the total exports decline and that of the manufactured capital goods goes up. Like-wise, the share of consumer goods in total imports falls and those of raw material and capital goods rises. (5) Technological progress. In the development process, there is a technical break through in agriculture, transport, industries, communication and other sectors of the economy The traditional techniques of production gradually give way to science based automated of economic techniques.mony and its Characteristics ' (6) Social, institutional chan, urbanization and ihe cntees: With the development of an evonomy, there is general consuming. There are chron, of modem methods of thinking, acting, producing and The propensities to unde nes 1” Pchaviourial, institutional and organizational factors. Summing up, we can sa. oa tisk, innovations, and investment become more sharp. side. Economic developmen gc tt Cconomic growth and economic development go side by . omic growth, vanced country means a contribution or acceleration of which can move a develoging ceaten, developing country, it means the rate of expansion development through the chan; county from the state of under development to the state of i cous! ae the technical and institutional arrangements. Whatever per capita eelopment, the essence..of economic development, 2 income in Teal income, climination of poverty, greater employment educatio equalities and more important development of physical , health, life expectancy etc, etc 4. MAIN MEASURES OF ECONOMIC DEVELOPMENT There are a nw mber of measures whit ve which have been used to estim: i development of.a country. These measures, in brief are, ate the- economic (i) Increase in real GNP. (ii) Increase in real per capita income. (iii) Rise in overall wellbeing of the people. (iv) Basic needs approach. (v) Human Development Index. however, remains, risin; opportunities, lessenin; quality of life such as The above measures of economic development are discussed now in brief. (i) Increase in_real GNP. Before 1970's, economic development was regarded as an increase in real national product of a 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 tural development. The growth and development at that time mainly meant the growth of industrial production. (ii) Increase_in_real_per_capita_income. Another traditional measure of economic development was an-inerease in real per capita income of a country. It was considered that if the rate of growth of-income per capita increases over a long period of time, it ‘would indicate that the country was moving towards higher standard of living and I per capita income can be achieved if the achieving economic goals. The increase in real achie nation has the ability to expand its output at a rate faster than the changes in price level.” = ; where r = real income, y = nominal income and p = price level. The problems of poverty, unemployment ‘and mal-distribution of wealth were of secondary importance. ure of economic cording to this ds and services Je will rise. In J and secular eople. The third traditional meast vell:being of the people. A get and consume more goo’ Rise in overall wellbeing of the z development was an increase in the economic \ i nt a le to measure, if the citizens of a country are abl | than before, people will be considered better off. The co ie the words of Okun and Richardson, “Economic development ! A6 Economics of Pakistan improvement in the mate services. well-being which is reflected in incre: ase in goods and The basie draw backs of these definitions are tha i ‘ distribution of wealth or atthe expense of health, safety and ard ‘work, ‘or unequal dignity ete. cic., it would be unjustified to link rise in income OF maeaah eePense of increase in economic welfare or economic dévelopment of th OF material welfare to an definitions do not inchide non-market goods-and services evel oe trode one oe selF-consumption, ae work at hiome etc. The Nive of conoone toh meted fr rise in national income by making an impro' i ey oT WIS eE ee or alternatives (o the traditional measures. neh servers comurineats asic Needs App! asi bach (i) Basic News Approach. Basic needs approach. also’ called Physical Quality of Lif ae ly three indicators for measuring economic development in a count; ; se indicators are (i) Life expectancy and age. (ii) Infant mortality and (iji) Liletey., The basic need approach is considered superior.as it spells out in detail the huma in terms of health. nutrition, shelter and'education-ete. It is also devoid of the flaws vie exist in per capita, GNP measure. However, the approach is criticised on the ground ta it does not include security, justice and human rights which are an important measures Fi quality of life. Human Development Index. The modem economists are not satisfied with GNP, pe capita oF national income as the principal measures of economic progress. According t them, the issue is not only how much growth ‘but what kind of growth. The formulated Human Development Index (HDI). There were number of measures whicl were included in this index, However, to keep the HDI simple and manageable, ‘th following main variables were included in it (a)’Life expectancy was chosen as: measure of long life (b) Literaey as an index of knowledge and (c) Real GDP per person (vi) Other diverse indicators. In addition to real GDP per person, the modern economist measure the level of country’s development from, the following indicators. culture in GDP. The higher th ped is the economy of a country (v me orjginating from. agri agriculture, the less develo The higher, thé per capita consumption ¢ try-and economy of the country. nsumed. If there is high percentage ' d by the people, the economy W! (1) The percentage of incol income originating from ption of enérgy- (2) Per Capita consum nere oped is the indus energy, the more devel (3) Percentage of starches in total calories co1 starches consumed in total calories consume! considered as underdeveloped. ot enrolment ratio. If the ratio of scho (4) Degree of urbanization, high scho o. If the itl ~ enrolment, the degree of urbanization and life expectancy is rising In @ country; ‘are considered as positive indicators of economic development.espn = Den (6) Infant mortal ality and densi density Beppu Se Se RR ee eel the infant mortality and lopment. gh, it is considered to be negatively related t© economic ing Economy y and its Char is Charucterisies 1 Summing up, “E ie 1B up, “Economic d political, Social and cultural changes pment includes not only economic growth Bit also a in society which contributes to better living standard. problems related to Pakistan the measures of Economic Development of The measurem ent of economi mi wmiber of problems related to se jievetopment ina country is a complex issue, There ate discussed below: measure of economic development which in brief are (1) Increase in real GDP. isi . If there is iricrease in real GDP over a long period of time, the country is described as havi ving a strong economie growth. In case of Pakistan, the revival NS of growth rate. that started i below: started in 2013-14 has accelerated i - i in 2016-17 as shown in the graph Se | ca sh Fig-1: GDP Growth (%) | 70 2012-13 2013-14 2014-15 2015-16 2016-17 So far as the sectoral shares of Agriculture, Industry and services are concerned, their percentage shares in the overall:GDP during the last three years remained as under: 2014-15. 2015-16 19.82 20.9: . Industry ServicesEconomies of Pakistay \ : a bans of Pakistan, the share COwn in the last three ye: industrial sec G 2 eo in GDP was 2 a in 2012-13 but has gon, for in the GDP iene 8 10 19.53% in 2016-1 " Sate share 0 share of services seers increased fiom 20.39% in 2012-1 ee, aH 2016-17, Thy acceleration in the ei . servi s & agriculture sector Pe ite sit le for at ak he GDP growth in 2016-17 over 2015-16. During the year, agricultun Orded a growth of 3.46% percent against the growth of 0.27% last year. Industria Sector recorded growth of $.08% as compared to 5.80% in the last year. Services sectg Accelerated at the rate of 5.98% as compared to 5.55% last year. 1 per capita income over a long period o conomic development. The real per capiy Q) ctrl in per capita income, Increase in real ime is also considered a strong indicator of ec income is gradually snereasing in Pakistan, It was S1,083 in 2007-08, S1,026 in 2008-95 $1,072 in 2009-10, $1,274 in 2010-2011, $1,321 in 2011-12, $1,334 in 2012-13, $1.39, in 2013-14, $1,857 in 2014-18, S1,S61 in 2015-16 and $1,629 in 2016-17. In Fact the pe capita income does not represent the standard of living of the people. We'shall have y consider the level of distribution of income and the rate of inflation in the country. (3) Basic needs approach, As regards the Basic needs approach, the indicators to tage of development in a county included regarding basic needs change with the st : Therefore, they are not helpful in measuring economic development of a country 5, HUMAN DEVELOPMENT What is human development? Since 1990, the development economists are laying great emphasis on the humar development both at the national and international level. Human development is nov considered a global issue. Human development as defined by Dr. Mahbub-ul-Haq is th process of enlarging people's choices as well as raising the level of well-being already acl ‘According to the modern economists, human life. cannot be enriched by the increase of only one choice i.e. income. There are other human choices such as leading a long and healthy life, to be educated and enjoying a decent standard of living, clean environmen political freedom, hurtian rights ete., which are essential for improving the human condition. The difference between economic growth and human development is that the fis exclusively stresses on the expansion of only one choice ie., income as a measure 0 economic development. Human development, on the other hand, covers the enlargement ¢ all human choices whether they are political, social, or cultural. Dr. Mahbub-ul-Hag right! ‘warns, “unless society recognizes that their real wealth is their people, an excessive obsess with creating material wealth can obscure the goal of enriching human. life”. Why human development is considered necessary? Human development is considered necessary for the following reasons. 1. Afier the Second World War, development was seen merely in terms of econo growth. However, in the nineties, took place a major shift in the development thinkin The modern economists led by late Dr. Mahbub-ul-Haq emphasized that econoShapter-l - Devetopi 1p! veloping Economy and its Characteristics > rowth i: cconomig oeeessRty for human well-being, Iti an important indicator of improving He development gts 9f the people but i s not the end in itself, The fact is that human ultimate objec et hile economic growth is the mean to achieve this end. The achieved by cae reve the human conditions and this objective fan only be access to pleasures ae People’s choices such as knowledge, health, political freedom, standard of living IH® and other necessary resources, which are needed for @desent Human development is an i economy. Th peony ah important souree of higher productivity in all sectors of the productivity aed boo ac uM ate healthy, educated and well skilled, they increase 3. It has been ex n important productive asset. health facil family size ai rienced ; i i all over the world that with the improvement in education levels, ies and aaa v ; e ies and economic conditions, there is reduction in infant morality, fll nthe ecrease in mortality rate. 4. Human di . poptlution! goat {essential for physical environnient. A country with low environment in the ee Population density generally creates healthy physical 5. Human develo; i site Tsil i iti See ee ‘helps in reducing civil disturbances and in increasing political Main Components of Human Development i Aceording 10 Dr. Mahbub-ul-Haq there are four essential components in the human jevelopment (i) Equity (ii) Sustainability (iii) Productivity and (iv) Empowerment. These components are explained in brief. (1) Equity: Equity means that all the people should have equal access to opportunities available in the country. For enlarging ‘people’s'choices to achieve ‘opportunities, there should be a (i) change in the distribuition of productive assets through land reforms (ii) introduction of progressive fiscal policy for transferting income from rich to poor (tit) provision of credit to the needy people for productive’ purposes (iv) giving opportunities to the'low income groups to’actively participate in’politics. (2) Sustainability: Sustainability is an essential component ‘of human development. The present ‘and. future’ ‘generation must “have mutual acoess to share development ‘opportunities. If this opportunity ig not available; human development will not progress. (3) Produetivity: Productivity in all sectors of the economy can be increased at a rapid speed Producti > ; by increasing investment in human capital (4) Empowerment: Empowerment means that people should be in a position to exert choices of their own free will. This ean only be possible if there is politica democracy in the country, less ‘economic controls and regulations, cerentvalization of power, provi of equal. opportunities to women to compete with men on an equal footing. i istan evelopment strategy in Pakis - ae i sa reexpenditure on human development has shown improvements on ae d Ti standard indicators of the people. For example, the literacy rate has increased from and livin}in 2015-1 ia aii measured by the number of 16. Housing conditions as ids using tap water as have been improving consistently. The % of householes Me i inking water has improved over the last several ¥ea"S- * 36% in 2007-08 to 58% Tooms availability ; Major source of dr the populati i Population and life expectaney have improved significantly. eing of the people. of well Human levelopment_ind ite measure i iecceli index is a composit ops in the 20 developed ing to the Human Development Report 2013, NOm™AY °F stan stands at 146%, ae of the world, Niger is the least developed in the ranking: India ranks 136" and Bangladesh 136" among the 185 countries. S OF DEVELOPIN 6. COMMON CHARACTERISTIC: COUNTRIES g in the world Out of these about 12% of the in , There are nearly 7.50 billion people livi h tor joome of around $584 a people live in poor fe underdeveloped countries having @ per ee : very high ($37,595 / year, Whereas in developed countries, the per Fi ineorare commonly called less Year). The poor countries with low per capita | and developing developed countries, under developed countries, thir countries. Meaning of under development ? Tees no precise definition of an under development economy. aie ie oe Nurkse, “Under developed countries are Dhose which compared with the advanced cow fe are under equipped with capital in relation\to their population and lias bite : The tinder developed country, according to Michal Todaro, is that which has fow levels # living. (Absolute poverty, poor ‘health, poor education and other social services), Low sel if esteem (Low respect, honour, dignity) and limited Freedom (freedom from external influence and dominance, freedom of choice etc). All these three factors work as a cumulative cause and affect the process and increase under development. In the word of Stanley “a country is said to be under developed which is characterised by the co-existence in greater or Tess, degree, of unutilized or under utilized manpower on the one hand and of unexploited natural resources on the other. At present 173 member countries of the United Nations constitute the third world. While almost all are poor in money terms but there are variations in their culture, social political and economic conditions. Despite these variations, the developing countries share a set of oe features both domestic and international. These common characteristics are as “ income : id world countries Common Characteristics an i ; Diaries [alcool debt. Most of the developing countries are depending on Re Geaaled ah to meet the short fall in domestic savings and the investments {ands required for auickening the pace of economic development. As the years pass, the ign loans is increasing in Pakistan. The liability of external debt and of lebt servicing has increased m Paki 1e outstanding external debt was Rs. a : a n Pakistan the outstanding :A uw Ae 10. Chapters = Dever ‘loping Ee Economy and its Characteristics fe ut Low Per capita j povere CaPita inca: i . p every ridden Porat Majority of the people living in developing countries are a ions. Serviers Ie a ed in low per capita income. People live in insanitary ar ealth, education expand vet People in LDC tess devo et expand very slowly, In short, mostly the a d countries) are ill-fed, ill-clothed, ill-housed and ill- ‘akistan the per i" Unproduetive us Per capita income has reached $1,629 in 2016-17, i in LDC’s is mostly used for excessive military expenditures, These expenditures provide Inappropri: ate [ is nvestment Decisions. It hi sually invested i Y tnvested in the purchase of thos example, the am lar en mple, the amount spent sa on sol; as also been observed that the funds available capital goods that are unsuited to LDC’s. For ergy may prove less valuable than on hydel Agriculture, th 8 > the Mai , the people live in ng, Supation. In developing countries two third or even more of developing stage. The gets, THeit main occupation is agriculture which is in a mostly live at s abe land holding and the yield per acre is low. The peasants 19.53% of GDP, panne ee As far as Pakistan is concerned agriculture contributes, inajar contort — ee about 42.3% of the labour foree and makes @ Under-utilizati conane ations! Natural Resources, An important characteristic of the developing ae ee natural resources either remain un-utilized or under-utilized or - Most of the countries are rich in resources but they remain unutilized ot under utilized due to lack of capital, primiti i pital, primitive techniques of production, lit i: the market and sluggish nature of the people. cena High rates of population growth. Almost all the developing countries are having a high population growth rate and a declining death rate. The development made with low per capita incomes and low rates of capital formation here is swallowed up by increased population. As a result there is no or very slow improvement in the living standards of the people. In Pakistan the rate of increase in population is estimated about 1.86% per annum in 2016-17. This growth rate is offsetting achievements of developments. Unemployment and disguised unemployment. Another notable feature of developing countries is vast unemployment and disguised unemployment both in the rural and in the urban areas, The unemployment rate is estimated at 5.9% in Pakistan in 2015-16. The unemployment is decreasing with the spread of education and urbanization. In developing countries people are economically backward are low labour efficiency, immobility of labour due t and psychological factors leading low level 0 Low level of productivity. The main causes of backwardnes: joint family system, cultural productivity. Lack of enterprise an' LDCs) lack dynami ed due to multipl structural facilitie 4 initiative, The less developed counties ( eneurs is hamper i ise and initiative of entrepr dership. The enterprise and initiative of entrepret heme ae Beh as small size of the market, lack of capital, Jack of infras technological backwardness ete. ete.12 J Economies of P AL. Deficiency of capital i es of Pakistan countries Gehl, Deficiency of capital i another oD Ay in all the developing 2) low rate of savin . The capital deficiency is mainly due to (1) low per capita income consumption pat ing (3) low rate of investment (4) inequalitics of wealth (5) adoption of ast pattern of advanced countries (6) higher level ‘pependiture of Consumption 12, Backward state of technology. All the developing countries are in the backward state of technology, The technological backwardness Moe to (1) higher cost of production despite low money wages. (2) deficiency ‘of capital (3) predominance of unskilled and untrained workers (4) dualism (5) misallocation Of resources ete, These aFe the major hurdles in the spread of techniques in the LDC's ‘ : elying on the 19th aS. 0 ary products. The LDC's are still relying ¢ pendence on export of PNA Tey are manly Pre TS ‘and exporting primary and importing finished goods and machinery century pattern of external trade Fes to the developed countri commod from them 14. Glut of Unskilled Workers. The LDC’s usually suffer from a glut of unskilled workers and a shortage of skilled porkers. The quality of population as measure y its skills, education and health is poor. and brightest students from developing 5. ain drain. There is an outfl 15. Brain wii students do not return countries to developed countries (Brain drain). May of these £0 n cone developing country. Those who come back get jobs as government officials. They Taries and material comforts. These talented persons remain unsatisfied with their low sa d i s remain in search of better jobs in foreign countries. They are thus not -owth for their own country. 16. Government control by wealthy persons: In most of the developing countries, the government is run by feudal lords and wealthy elites. These influential persons are more interested in promoting their own economic interests rather than.improving the quality of life of the poor living in the country. 7. CHARACTERISTICS OF DEVELOPED VERSUS DEVELOPING COUNTRIES The total population of the world in 2013 reached 7.046 billion people. About 5.144 billion of the world’s population is living in low and middle income countries and the remaining 1.302 billion in the developed world. There is a marked difference in the standard of living of the people living in advanced industrial countries and those living in developing countries. The main indicators which differentiate the developed countries from the developing countries are in brief as under: (1) GNP per Capita One of the crude index of measuring the level of national well being of the people acros the world is GNP per capita. In the advanced countries of the world, the GNP per capita fe exceeds that of low and middle income economies, The income inequalities between tt developed and under developed countries are not only large but the gap between them increasing as the years pass. According to the World Development Report 2014, the GNP ¢ low of the best mostly entrepreneurs of economic 813 of USA wi aS as hi income countries. GNp given below: gh as a y I as $5012, and UK $38250 whereas it is around $$84 of low “pita of sclected developed and underdeveloped countries is GNP Per Capita in US Dollars Developed countries * GNP per Low and middle | Gyp a capital 2016 income countries eh aaa USA cone Bangladesh 3,790 y oo Pakistan 5,580 nce India 6490 Canada : China 15,500 (2) Consumption of World’s Output Th i ae pa aaa ations account for about one quarter of the world population but they are wk thige foot i about three quarters of the world’s output. The developing countries ree fourths of population thus consume one fourth of world income: The result is that people living in developing countries have limited income. Their per capita income is near to the subsistence level. (3) Unutilized and underutilized resources In developing countries most of the resources of the country remain unutilized or underutilized due to limited savings, unproductive uses of funds, inappropriate investment decisions, shortage of skilled workers, availability of low development technology etc. etc. Whereas the advanced nations make full use of the resources available to them. The advanced countries have substantial resources, efficient and productive technology to make the best use of resources for production. (4) Vicious Circle of Poverty i i ing di icious circle of poverty The developing countries are finding difficult to come out of the vicious circ! due to limited ee and the low level of investment. The advanced countries of the world are making full use of human and physical capital for the development and progress of their countries. (5) Population irth rates and death 1 j n f mace industrial countries. Birth rates in LDC’s are gener advan dd: whereas in developed countries er thiousan ‘count order of 30 10 40 P in developing countries is estimates crude death rate i thowsand, Tjeveloped nations it ranges from 4 to 8 per thousand. whereas ingly different between developing countries anc nL erally at very high level of thi it ranges from 6 to 12 pe .d at 10 to 20 per thousan’ rates are stri14 (6) Life expectancy Currently the global life expectancy is 71 years for females. In Pakistan the average Ii 65.8 years in 2017 for males and from 66.5 years in (7)Secondary school enrollment countries 1S about 4 The secondary school enrollment In developed countries it is about 95' (8) Percentage of popul ¥ of the popula ation in urban area in urban areas in Economics of Pakistan 68.50 years for males and 73.50 years fre improved from 64.6 years i 2013 1p 013 to 68.2 years in 2017 for females fe expectancy (0% of the population, in developii in developing sn 49%)- ition (Pal S LDC’s is about 27%; whereas in The percentage of population (Pakistan 40%) advanced countries it is about 80% (9) Popula The popu of the people live overall poverty situatior the people fell below the po Arabia, Italy, Ireland, France, lessness and Powel ntries, there is bject themselv (10) Voicel In developing cour Their voicelessness sul the hands of the institutions people are not maltreated at tl voice against any themselves whole! (11) Debts. During the last international loans and also on their outstanding loans. nations in their compl poor nations to repay the debts. These attacking poverty of the people living i injustice. The peop two decades, tl n below the poverty li lation below the poverty line vari d below the ‘poverty line i yn in 2010-11 is expect wverty line in 2 “Austria, the persons fall es to rudeness, of the state and so fhe hands of institutions. heartedly in raising their living stan domestic loans. It is feare The advanced countries hi lete hold. The developed nations mus' a from country to country. In Pakistan, 22.3% 005-06. In 2008 it declined Fo 21.04%. The ted to have further improved. In India 32.67% of USA, UK., Spain, South Aftica, Saudi ing below the poverty line are Nil. 010. In of the people rlessness I power and ind lack of voice, lependence of the people. rr human treatment and exploitation at d countries of the world, full liberty to raise their security and engage heights. ciety. In advance They have Te, therefore, work with peace and s dards and reaching new fhe developing countries are heavily burdened with .d that many debtor nations may default ave brought the heavily indebted poor t recognise the helplessness of the debts should be written off or reduced to soft loans for in LDC’s. (12) Social overhead capital. n burdened with inadequate social overhead capital, are oftel The developing countries Ith, and ranging from poor public heal service etc. As these social 01 countries are not able to provi huge resources at their disposal countries for accelerati their citizens. (13) Inequality in incomes “ ‘As the years pass, widening. The developed countries s| verhead are expensive to provide, tl ide on large scale. The indi I have spread a net work of social ov ing the rate of economic development and raising t the income gap between the uate roads, telephone, air therefore, the developing lustrial advanced countries, having erhead in their own fhe living standard of sanitation facilities to inadeq developed and developing countries is hould, therefore, open market opportunities to poo!Chapter-l — Deveto Econon v and its Characte s 15 nations to build u, P their advanced nations SSsets and bre ak the vicious circle of poverty for coming closer to the (14) Market economies The industrial 'strially advane . sock of capital goods, advance guntties have developed market economies based on large well knit market, Whereas the Se rroduction technology and well skilled labour force and loping countries suffer marketing deficiency like that of infrastructure deficienci labour fore se weak bargaini iti Tw poten an no ers The (15) Information technology, here is a rapid a ‘ world. The Pvolaion iSvancement in information technology in advanced countries of thi potential benefits to them, It Rea technology in all the sectors of the economy has brow ht and international level, ae helped them in expanding goods and services at the national transportation costs, expeditine eet? Cot OF production, reducing inventories, reduced ing access to information etc. The developing countries are far behind them in learni n A , country. '& and adoption of information technology for rapid growth of the 8. TWELVE MUSTS FOR ECONOMIC DEVELOPMENT The traditi i growth has ey amet st icsonome development which primarily focused on economic g 5 in, i i in the following twelve musts ing to modern economists, the development is summed up 1. Development must be total. It should be beyond economic dimensions and include he whole dimensions of social, cultural and even spiritual self realization embracing creativity, quality of life and the rights of man. The strategy of development must be original. It should not be a blind imitation of the models of other countries. The strategy should be framed in such a manner that it responds to the economic, social and cultural requirements of a country. 3. Development must be self-determined. The internal markets should be widened so that it would ensure the production and supply of basic food stuffs and goods to the people. 4, Development must b participate with one anot! the less developed world a1 countries. 5, Development must developed in such a 6. Development must respect the integrity of the religious environments of a country. The alien val imposed on the people of a country. | authority should safeguard thority shoul 7. Development must be properly Phased. The ail a eh ase only the genuine interests of private enterprise. It should be properly There must be participation by all sectors of the population in the structural ¢-amation of the economy. — Rp e co-operative. All the developing countries should her for raising the standard of living of the people living in nd in quickening the process of development in these be integrated. All the basic sectors of the economy should be manner that they ensure real development. natural, social, cultural and ues should not unnecessarily be