3.

Kaldor Model – (Nicholas Kaldor) cites that technology should be included in the production of
capital goods as investment.
ECONOMIC GROWTH AND DEVELOPMENT Human Development Index and other Social Indicators
What is the difference between growth and development? ❖ Human Development Index (HDI) focuses on three measurable dimensions of human
❖ Growth – refers to the quantitative changes development: living a long and healthy life, having education, and having a decent standard of
❖ Development – refers to the qualitative and progressive changes that occur in the process. living. It could be summarized into measures of life expectancy, school enrolment, literacy, and
❖ Economic growth – refers to the steady process of increasing productive capacity of the income, allowing a broader view of a country’s development.
economy ❖ Human Poverty Index (HPI) – focuses on the proportion of people below threshold level in basic
❖ Economic development – refers not only to the steady increase in productive capacities of one dimensions of human development. HPI measures human poverty in developing countries.
economy but more specifically to a series of progressive or qualitative changes that occur such as ❖ The HDI further measures the average achievements of one’s country. The gender – related
capital accumulation and technology advancement that leads to a sustainable improvement of development index (GDI) - measures achievements in the same dimensions, using the same
both physical and human resources. indicators as the HDI.
❖ The gender empowerment measure (GEM) reveals whether women take an active role in both
THEORIES OF ECONOMIC DEVELOPMENT economic and political life. GEM tracks the share of seats in parliament held by women; female
1. Laissez Faire – (French term) it denotes freedom from any intervention of all sorts, meaning legislators, senior officials, and managers; of female professional and technical workers and the
government should not interfere in economic affairs of the individual and society gender disparity in earned income.
2. Classical Theory – (Adam Smith) it explains how the wealth of a nation is created and
distributed. PREPARED BY:
3. Theory on Population – (Thomas R. Malthus) stated that population increases in geometric
ratio while food supply increases in arithmetic ratio. ELLEN NICY ROA
4. Theory on Comparative Advantage – (David Ricardo) it postulates that nations should export
the goods which they enjoy the greatest advantage and should not import the goods which they
have the greatest disadvantage.
5. Karl Marx Theory – (Karl H. Marx) emphasize the value of labor, stating that workers are the
real producers of goods, and the benefits of the production should go to the workers and not the
capitalists.
6. Theory on Progress and Poverty – (Henry George) during the economic growth in California
during the 1870’s, made him critical to analyze the distributive shares among the factors of the
production.
7. Keynesian Theory of Employment (Modern Theory of Employment) – emphasizes that the
cause of unemployment is high wages. There will be more employment if wages are low. This
theory, related to the demand and supply for labor, states that employment determines the
necessity of equating the aggregate supply of goods with the aggregate demand for goods.
MODELS OF GROWTH

1. Ricardian Growth Model – David Ricardo stresses the limits of economic growth brought
about by scarcity of land being fixed input. Land is the key factor to this theory.
2. Harrod – Domar Model – this model is partnership effort between Sir Roy F. Harrod & Prof.
Evsey D. Domar. The important factor of this model is the production of capital goods such as
machinery, buildings and other equipment. This model shows the relationship between the
efficiency of the input and output. Efficiency of the output is measured in terms of effect.