ECONOMIC

DEVELOPMENT
1. For all of their diversity, many less
developed countries are linked by
a range of common problems.
What are these problems?
Which do you think are the most
important? Why?
Less developed countries or Least Developed Countries(LDCs) are those countries that
exhibit poor economic and social development. Lower per capita income, weak human
resources, and high economic instability are the highlights of the LDCs. Problems
encountered in LDCs:

Poor productive capacity- LDCs have the majority of the population working in the
primary sector. They still have not merged into the secondary sector. Strong productive
capacity is necessary for boosting economic growth in LDCs. It is the secondary sector
that attracts all investments. Lack of productive capacity has made them victims of
various economic crises.

Population- the increasing population is a key challenge for the growth of LDCs. LDCs
have a poor capacity to absorb their labor force into the secondary sector. The lack of
proper technology to use the human resource in productive channels acts as a
hindrance to growth.

Infrastructure facilities- The lack of proper infrastructure is another curse of LDC. The
unavailability of basic infrastructures like transportation, market linkages, and
communication are the major setbacks in LDC.
Mounting debt- LDCs borrow from various sources to finance basic necessities like
health and education. LDCs are more prone to epidemics and they have to provide
for investing in the health care sector. Outbreaks of epidemics force them to borrow,
thus, increasing the debt burden.

Among the problems stated above climbing debt rates and lack of productive
capacity is the major problem LDCs face. Since LDCs do not have any profitable
sector they are mostly engaged in the primary sector which is always vulnerable to
environmental shocks. Turbulence affects their income and trade prices. Most
people live with a lower per capita income, and intensifying shocks in the agriculture
sector would push them into the clutches of poverty. Once they are caught in this
vicious cycle, these countries will never recover. LDCs already have budgetary
deficits, mounting debts would simply widen the gap by increasing the payment
burden of the government.
2. What are some additional
strengths and weaknesses of
the Human Development
Index as a comparative
measure of human welfare?
If you were designing the
HDI, what might you do
differently, and why?
Additional strengths of the Human Development Index (HDI) include its
simplicity, which allows for easy comparison across countries, and its focus on
multiple dimensions of well-being beyond just economic indicators.
Weaknesses of the HDI include its reliance on aggregated data, which can
overlook disparities within countries, and its exclusion of important factors
like income inequality and environmental sustainability. If I were designing
the HDI, I would incorporate measures of income inequality and
environmental sustainability to provide a more comprehensive picture of
human development. This would better reflect the complexities of human
welfare and ensure a more holistic assessment.
"Social and institutional
innovations are as important for
economic growth as
technological and scientific
inventions and innovations."
What is meant by this statement?
Explain your answer.
This statement suggests that alongside technological advancements,
societal and institutional changes, such as new policies, regulations,
and social structures, play a crucial role in fostering economic growth.
It emphasizes the importance of creating supportive environments
and frameworks that enable innovation, entrepreneurship, and
equitable distribution of resources, all of which contribute to
sustainable economic development.
Thank you
very much!