Unit 1

1. What is Economic Development?

Ans.:- Fundamentally, economic development is about the expansion of people's
capabilities (people development) over time. Therefore, economic development goes
beyond increasing the income and output associated with economic growth and also takes
into account poverty reduction and income redistribution.
Economic development indicators are used to measure the well-being of people by
considering factors that influence the standard of living in an economy.

There are a few developmental measures. They are:

HDI – Human Development Index.

HPI – Human Poverty Index.
Multidimensional Poverty Index.
GPI – Genuine Progress Indicator
2. What is Economic Growth? Distinguish between Economic Development and Economic Growth.
Ans:- Economic growth can be referred to as the increase that is witnessed in the monetary value
of all the goods and services produced in the economy during a time period. It is a type of
quantitative measure that reflects the potential increase in the number of business transactions
taking place in the economy.
The difference between Economic Development and Economic Growth are discussed below:

Points of Distinction Economic development Economic Growth

Definition It refers to the overall It refers to the increase in the
development of the quality of monetary growth of a nation in a
life in a nation, which includes particular period.
economic growth.
Span of concept It is a broader concept than that It is a narrower concept than
of economic growth that of economic development.
Scope It is a uni-dimensional approach It is a multi-dimensional
that deals with the economic approach that looks into the
growth of a nation. income as well as the quality of
life of a nation.
Govt support It requires intervention from the It is an automatic process that
government as all the may or may not require
developmental policies are intervention from the
formed by the government government
Measurement Both quantitative and Quantitative in nature
qualitative in nature.

Q.:- what are the best measurement of economic growth?

Ans:- The best measurement of economic growth are discussed below:-

1. Gross Domestic Product:- The gross domestic product is the logical extension of measuring economic
growth in terms of monetary expenditures. If a statistician wants to understand the productive
output of the steel industry, for example, he needs only to track the dollar value of all of the steel
that entered the market during a specific period.
2. Gross National Product:- Those of a certain age may remember learning about the gross national
product (GNP) as an economic indicator. Economists use GNP mainly to learn about the total income
of a country's residents within a given period and how the residents use their income.
3. Productivity and spending:- The relationship between production and spending is a quintessential
chicken-and-egg debate in economics. Most economists agree that total spending, adjusted for
inflation, is a byproduct of productive output. They disagree, however, if increased spending is an
indication of growth.

Q.:- what is Development Economics? Discuss the types of Development Economics.

Ans:- Development economics is a branch of economics that focuses on improving fiscal, economic, and
social conditions in developing countries. Development economics considers factors such as health,
education, working conditions, domestic and international policies, and market conditions with a focus
on improving conditions in the world's poorest countries.

The types of Development Economics are discussed below:-

1. Mercantilism:- It was an economic system of trade that spanned the 16th century to the 18th
century. Mercantilism was based on the principle that the world’s wealth was static, and
consequently, governments had to regulate trade to build their wealth and national power. Many
European nations attempted to accumulate the largest possible share of that wealth by
maximizing their exports and limiting their imports via tariffs.
2. Economic Nationalism:- Economic nationalism reflects policies that focus on domestic control of
capital formation, the economy, and labor, using tariffs or other barriers. It restricts the
movement of capital, goods, and labor
3. Linear Stage of Growth Model:- The linear stages of growth model was used to revitalize the
European economy after World War II. This model states that economic growth can only stem
from industrialization. The model also agrees that local institutions and social attitudes can
restrict growth if these factors influence people’s savings rates and investments.
4. Structural change theory:- The structural-change theory focuses on changing the overall economic
structure of a nation, which aims to shift society from being a primarily agrarian one to a primarily
industrial one.

Q.:- Distinguish between Developed Economies and underdeveloped economies.

Ans:- the difference between Developed Economies and underdeveloped economies are discussed below:
Q:- what is Human Development Index?

Ans:- The Human Development Index (HDI) is a statistical tool used to measure a country's overall
achievement in its social and economic dimensions. The social and economic dimensions of a country are
based on the health of people, their level of education attainment and their standard of living.

Q:- how to calculate the Human Development Index ?

Ans:- The Human Development Index (HDI) is a composite statistics of life expectancy, education, and
income indices to rank countries into four tiers of human development. It was created by economist
Mahbub-ul-Haq, followed by economist Amartya Sen in 1990, and published by the United Nations
Development Programme (UNDP).

In its 2010 Human Development Report, the UNDP began using a new method of calculating the HDI. The
following three indices are used:

1. Life Expectancy Index

2. Education Index: It includes
a. Mean Years of Schooling Index
b. Expected Years of Schooling Index
3. Income Index

Q:- Distinguish between Economic Development and Human Development.

Ans.:- the Difference between Economic Development and Human Development are discussed below:

Economic Development Human Development

It refers to a continuous and
sustained growth in an economy
along with a general
improvement in the overall
standard of living in the nation.
Economic Development focuses
on the economy as a whole.
It has a wider scope
It refers to an improvement in
the overall well-being and
quality of life of individuals
Human Development focuses on
just the human aspect.
It is comparatively narrow in
scope.