ECONOMIC

DEVELOPMENT IN
PAKISTAN
4659
 Basic concept of economic
development

 Economic development is formally defined as the process of moving from

a situation of poverty and deprivation to a situation of increased
production and plenty, through investments and changes in the
organization of work.

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  Economic development refers, generally, to social progress. It implies an
improvement in, for example, the standard of living--the human condition,
in a short cliche. For development to occur, there must be a change in
the way that goods and services are produced, not only in which goods
and services. This is in contrast to economic growth, which generally
applies only to quantitative growth and is often measured in the change in
GDP over time.

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 Arther Lewis

 Sir Arthur Lewis was an economist famous for his work in development
economics.
 He was awarded the Nobel Memorial Prize in Economics in 1979
 According to Prof. Arthur Lewis:
 "Economic Development represents the per capita increase in the
production of a country".

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 Definations

 "Economic Development is a process whereby the people of a country

utilize the available resources in such a way that the per capita income of
the country increases". (Prof. Williamson)
 "Economic Development is the increase in per capita and national
income (NI) of a country". (Bengamin Higgins)

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 Definations

 "Economic Development is a process whereby the real NI of a country

increases over a long period of time. If the increase in the real NI is more
than the population increase then the per capita real income of the
country will also increase". (Meir and Baldwin)
 "Economic Development shows the excess of consumption and
production of a country as compared with increase in population. This
increase in population is due to better combination and increase in the
productivity of the factors of production". (Prof. Winston)

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 Economic Development Resources

 Minerals
 Energy resources
 Forests
 Fish farms
 Agricultural Land
 Capital

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 Economic Development Resources

 Foreign Capital
 Human Resources
 Education
 Transportation

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 Measurement of Economic
Development

 Real National Income Approach(RNI)

 Per capita Income
 Method of economic growth
 The method of social welfare

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 Obstacles in Real National Income
Approach

 Difficult to provide accurate data

 Difficulties in determining the correct price of goods
 Non-cooperation of the people
 Non Finance Sector
 Services
 Dual Counting Threat
 Transfer payments

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 Obstacles in Per Capita Income

 Lack of accurate statistics

 Unequal income
 Important areas of life
 Commodity prices differ
 Inadequate measurement of per capita income

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 Method of economic growth

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 The method of social welfare

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 Per Capita Income

 Per capita income is a measure of the amount of money earned per

person in a nation or geographic region. Per capita income can be used
to determine the average per-person income for an area and to evaluate
the standard of living and quality of life of the population.

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 Characteristics of a semi-developed
economy

 Low per capita income

 Rapidly growing population
 Lack of efficiency
 Use of natural resources
 Lack of capital
 Unequal distribution of income

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  Exporting raw materials
 Balance of payments
 Less use of technology
 Dependence on agriculture

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 Economic Development

 Economic development is the quantitative and qualitative change in an

economy.
 Economic development refers to the reduction and elimination of poverty,
unemployment and inequality with the context of growing economy.
 Economic development means an improvement in the quality of life and
living standards, e.g. measures of literacy, life-expectancy and health
care.
 Economic development includes process and policies by which a country
improves the social, economic and political well-being of its people.

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  Economic development focuses on distribution of resources.
 Economic development relates to growth of human capital indexes and
decrease in inequality. It is concerned with how people are affected.
 Economic development is multi-dimensional in nature as it focuses on both
income and improvement of living standards of the people.
 Economic development comes after economic growth. It is a positive
impact of economic growth.

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  Indicators of economic development are:
 Human Development Index (HDI), Human Poverty Index (HPI) ,Gini
Coefficient ,Gender Development Index (GDI)
 It is a continuous and long-term process. Economic development does not
have specific time period to measure.
 Economic development brings quantitative and qualitative change in the
economy.
 Economic development requires intervention from the government as all
the developmental policies are formed by the government

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  It refers to increase in productivity.
 It is concerned with structural changes in the economy. Economic
development= Economic growth + standard of living
 It is concerned with happiness of public life.
 Achieving economic development is linked with end of poverty and
inequality.
 More relevant to measure progress and quality of life in developing
countries.
 It is more abstract concept.

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 Economic Growth

 Economic Growth is the positive change in the indicators of economy.

 Economic Growth refers to the increment in amount of goods and services
produced by an economy.
 Economic growth means an increase in real national income / national
output.
 It refers to an increase over time in a country’s real output of goods and
services (GNP) or real output per capita income.

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  Economic growth focuses on production of goods and services.
 Economic growth relates a gradual increase in one of the components of
GDP; consumption, government spending, investment or net exports.
 It is concerned with how people are affected.
 Economic growth is single dimensional in nature as it only focuses on
income of the people.
 Economic Growth is the precursor and prerequisite for economic
development. It is the subset of economic development.

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  Indicators of economic growth are: GDP, GNI ,Per capita income
 It is for short term/short period. It is measured in certain time frame/period.
It is a continuous and long-term process.
 Economic growth only looks at the quantitative aspect. It brings
quantitative changes in the economy.
 Economic growth is an automatic process that may or may not require
intervention from the government
 It refers to increase in production.

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  Economic growth is relatively narrow concept as compared to economic
development.
 Economic growth is concerned with increase in economy’s output.
 It is not concerned with happiness of public life.
 Poverty and inequality may remain in economic growth
 Economic growth is more relevant metric for assessing progress in
developed countries.
 It is a material/physical concept.

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 Social welfare

 Social welfare systems provide assistance to individuals and families

through programs such as health care, food stamps, unemployment
compensation, housing assistance, and child care assistance. The factors
involved can include the size of the family unit, current income levels, or
an assessed disability.

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 Measurement of Economic
Development

 Real National Income (RNI)

 Per capita Income
 Economic Welfare

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 Real National Income (RNI)

 Real national income is nominal or money national income (output)

adjusted for inflation. It is also national income at 'at constant prices.
 The most frequently used measure of national income is Gross Domestic
Product (GDP).

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 Per Capita Income

 Per capita income or total income measures the average income earned
per person in a given area in a specified year. It is calculated by dividing
the area's total income by its total population. Per capita income is
national income divided by population size.

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 Economic Welfare

 Economic welfare is the level of prosperity and standard of living of either

an individual or a group of persons. In the field of economics, it specifically
refers to utility gained through the achievement of material goods and
services.

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