CHAPTER 1

Q1. Why is economics central to an understanding of the problems of development?

It is because that the development of a country depends on economic factors. Economics helps you to
interpret how a country is developing, economic policies of a country that determine whether or not it
develops and how fast it develops if it performs. In addition, economics helps you to understand how
wealth and finance are distributed, and the causes and effects of borrowing and lending. Problems of
development are like not having enough money, economics teaches us about problems in development
and so we can better interpret these problems primarily by looking at the economic components that
define the troubles.

2. Is the concept of the developing world a useful one? Why or why not?

A developing country, also called a less-developed country, is a nation with a lower standard of living,
underdeveloped industrial base, and low Human Development Index (HDI) relative to other countries.
On the other hand, since the late 1990s developing countries tended to demonstrate higher growth
rates than the developed ones. There is no universal, agreed-upon criterion for what makes a country
developing versus developed and which countries fit these two categories, although there are general
reference points such as a nation’s GDP per capita compared to other nations. Also, the general term
less-developed country should not be confused with the specific least developed country. There is
criticism of the use of the term developing country. The term implies inferiority of a developing country
or undeveloped country compared to a developed country, which many countries dislike. It assumes a
desire to develop along the traditional Western model of economic development which a few countries,
such as Cuba and Bhutan, choose not to follow.

An alternative measurement that has been suggested is that of gross national happiness, measuring the
actual satisfaction of people as opposed to how industrialized a country is. There is some criticism of the
use of the term “developing country”. The term implies inferiority of a “developing country” or
“undeveloped country” compared to a “developed country”, which many countries dislike. It assumes a
desire to “develop” along the traditional Western model of economic development, which a few
countries, such as Cuba and Bhutan, choose not to follow. The term “developing” implies mobility and
does not acknowledge that development may be in decline or static in some countries, particularly in
southern African states worst affected by HIV & AIDS. In such cases, the term “developing country” may
be considered a euphemism. The term implies homogeneity between such countries, which vary widely.
The term also implies homogeneity within such countries when wealth (and health) of the most and
least affluent groups varies widely. Similarly, the term “developed country” incorrectly implies a lack of
continuing economic development/growth in more-developed countries.