FACTORS / PRE - REQUISITES OF ECONOMIC

DEVELOPMENT
INTRODUCTION Strong Bearing on economic growth

FACTORS.

A. Economic Factors
(1) Natural Resources

Soil, Fertility of land, water supplies, minerals, forests, climate, oceans,

cliffs etc. gift of God Development depends not only on availability but
utilization Oil resources etc. Principal factor. Deficient will not rapidly. Some
substituted with improved technology. Japan, Switzerland, South Korea
Superior Technology. New research, high knowledge, shortage meet from
synthetic.

(2) Human Resources.

Comprise the different qualities of population

People → Knowledge of technology > well educated → fully utilize national

resources. On other hand, not well educated → cannot properly → remain
under developed
Effectiveness Counts.

(a) Population Growth.

(i) Size too small → does not afford full scope for specialization →
sufficient quantity is not produced - too large - huge population leaves little
scope of savings. According to resources

(ii) Rate,more swallow up growth. Food, unemployment lower labour

efficiency

(b) Pressure of Population.

More pressure burden - natural resources Bangladesh (PKM pressure high
as compared to USSR Canada, Austria, New Zealand. (but Japan)

(C) Dynamic Enterprises.

Good organizer → bring together the various agents of production - best

use. Adoption of optimum combination of factors of production wider
profit margin

(d) Supply of Enterprises.

Training Institutions

. Supply of New Material → Wider market for production

. Government is providing > herself for heavy and also certain important
consumer goods

(e) Division of Labour / Specialization.

Lead to more productivity of factors of production - labour manifold -

development is accelerated,

(3) Capital Formation.

Increase in the real stock of assets in the country, factories, bridges,

railways etc. depends upon savings with better capital → output
increases fastly → employment opportunities.

Sources.

(a) Domestic Dishoarding, savings, taxes, public debt, use of idle resources,
deficit financing private development programme,

(b) External : loan, aid, investment, restriction on imports,

import substitution

Process of Capital Formation.

(a) An act of Savings.

Postponement of consumption - attraction - banks - reinvestment

(b) Capital Markets.

Mobilizes savings

(c) An act of investment.

Channelized

(4) Structural Changes.

Implies transition from a primitive agrarian to industrial economy

changes> employment opportunities, higher labour productivity
improvement in technology, agriculture should develop- counter effects.
(5) Labour.

Key Factor. Capital poor and labour rich

Hours → increase wages → cut down hours → reduce wages → poor diet,
less medical care etc. productivity depends on normal and intellectual skills,
work habits level of education

Effectiveness depends upon: -

Investment in Human Capital

Education on job training, increase in health, nutrition. Role of Labour

Unions.
Can create discipline to provide peace of mind improvement in production
improve efficiency
(6) Power.

Foundation for development

(a) Power.

Oil, Coal, Hydle. Thermal Electricity, Nuclear etc

(b) Non-Commercial,

Animal power, fuel, wood, cow dung

• Initial push to raise production of all sectors

• Quickly > gap

• Economies of Scale • High Living Standard

• Reduction in material wastages

Sufficient supplies pre-requisite

(7) Transportation and Communication.

(a) Economic.

Stimulates external and internal trade → reduction in costs.

(b) Social.

Spread of education, sense of brotherhood, unity at home / abroad,

encourage progressive culture

(c) Political.

Restoration of peace, law and order situation

(8) Education Training,

Skills → gainful employment, Effectives human capital

B- Non Economic Factors.

(i) Political Factors,

(a) Law and order (b) Democratic government (c) Development minded (d)
Positive opposition

(ii) Administrative / Organizational Factors.

(a) rewards and pays (b) efficient bureaucracy (c) accountability.

(iii) Socio, Cultural Factors,

(a) Social behavior (b) dependence on one earning hand

(c) Values and believes (d) Joint family system