ECONOMICS

DEVELOPMENT
TOPICS IN THE CHAPTER

• Overview
• What Development Promises —Different People, Different Goals.
• Income and Other Goals.
• National Development.
• How to Compare Different Countries or States?
• Income and Other Criteria.
• Public Facilities.
• Sustainability of Development.
OVERVIEW

• (i) Perspectives on development.

• (ii) Common indicators for development.
• (iii) Method for measuring development.
• (iv)Concept of purchasing power parity.
WHAT DEVELOPMENT PROMISES - DIFFERENT
PEOPLE, DIFFERENT GOALS
• → Development promises a real growth by enhancing total income and
standard of living of a person.
• → Different people have different development goals. The development goals
are varying from people to people.
• → For example, a girl from a rich urban family gets as much freedom as her
brother and is able to decide what she wants to do in life. She is able to pursue
her studies abroad.
INCOME AND OTHER GOALS

• → People prefer to earn more income for fulfilling their daily

requirements of life. Companies provide material thing like, money.
But people also want nonmaterial thing like, freedom, security, and
respect of others.
• → Some companies provide less salary but offer regular employment
which enhances sense of securities.
• → In other case, some companies provide high salary but offer no job
securities. They reduce sense of securities.
 NATIONAL DEVELOPMENT

• → National development refers to ability of a nation to improve

standard of living of its citizens.
• → Standards of living of citizens depend upon per capital
income, Gross Domestic Product, literacy rate and availability of
health etc. These factors also consider as measure of
improvement.
 HOW TO COMPARE DIFFERENT COUNTRIES OR
STATES?
• → We can compare different countries or state on the basis of per capital income.
• → We cannot take national income to compare different countries because each country has
different population rate.
• → Per capita income is calculated by dividing total income of a country to total population
of that particular country.
• → Per capita income of a country shows the standard of living of the citizens of that
particular company.
• → A country with higher per capita income is more developed than others with less per
capita income.
 DRAWBACKS OF COMPARING AVERAGE INCOME

a) It cannot show the actual income status of a country.

b) Distribution of income amongst rich and poor class is not reflected in the concept of per
capita income.
c) It does not reflect the standard of living of the people. If the increased national income
goes to the few rich instead of giving to the many poor. Then this may not represent the
standard of living of the people.
d) If a small section of people has very high income, the per capita income also gets high and
does not give proper idea about the actual situation.
e) High per capita income does not guarantee for better health care .
 WORLD DEVELOPMENT REPORT

• In World Development Report, brought out by the World Bank, average income criterion or per
capita income is used in classifying countries.

a) Countries with per capita income of US$ 12,056 per annum and above in 2017, are called rich
countries.
b) Those with per capita income of US$ 955 or less are called low-income countries.
c) India comes in the category of low middle income countries because its per capita income in
2017 was just US$ 1820 per annum. This is also called GDP per capita.
d) The rich countries, excluding countries of Middle East and certain other small countries, are
generally called developed countries.
 INCOME AND OTHER CRITERIA

• → For achieving development goal of people, people not only want better income, they also want non-
material thing like, freedom, security, and respect of others.

• For development of a nation average income or per capital income is needed. Per capita income of
selected States
• If per capita income were to be used as the measure of development, Haryana will be considered the
most developed and Bihar the least developed state of the three. However, this is not true, if we look
at the other criteria.
• In this table: → The first columns shows that in Kerala, out of 1000
children born, 12 died before completing one year of age
• In Haryana, the proportion of children dying within one year of birth was
36, which is two times more than that of Kerala.
• This number is 44 in Bihar. → Literacy rate in Kerala is 94 percent which
is higher than Haryana (82%) and Bihar (62%).
• → The last columns shows that in Kerala, 83 children out of 100 aged 14-
15 are not attending school beyond Class 8 which is greater than Haryana
(61) and Bihar (43)
• Per Capita Income: The total income of the country divided by the population is called
per capita income.
• Literacy Rate: It is the number of people above 7 years of age who are able to read and
write with understanding. Higher the literacy rate, more developed a state will be. India
has a literacy rate of 64%. Kerala has the highest literacy rate and Bihar has the lowest.
• Infant Mortality Rate: It is the number of children that die before attaining one year of
age as a proportion of 1000 live births in a year. It indicates the development of health
facilities in a country. In India, Kerala has the lowest IMR while Bihar has the highest.
• Net Attendance Ratio: It is the total number of children of age group 14 and 15 years
attending school as a percentage of total number of children in the same age group.
 PUBLIC FACILITIES

• → Facilities which are provided by the government considered as public facility like
schools, hospitals, community halls, transport, electricity etc.
• → As we know that Punjab has more income than the average person in Kerala but
Kerala has a low infant Mortality Rate because of better public system like, Public
Distribution System which provide Health and nutritional status to the state.
• → We need public facility because we are not able to purchase all things by money.
We cannot able to buy a pollution free environment with the help of money
 HUMAN DEVELOPMENT REPORT
• Though the level of income is important, yet on its own it is an inadequate measure of the level of
development, we begin to think of other criterion. Such as health and education indicators. Over the past
decade or so, health and education indicators have come to be widely used along with income as a measure
of development.
• The Human Development Report published by United Nations Development Programme' (UNDP)
compares countries based on the educational levels of the people, their health status and per capita income.
• The Human Development Index (HDI) is a composite statistic of life expectancy at birth, education years,
and per capital income. It is used to distinguish whether the country is a developed, a developing or an
underdeveloped country.
• Originally the index was developed in 1990 by Pakistani economist Mahbub ul Haq and Indian economist
Amartya Sen. Countries fall into four broad human development categories: Very High Human
Development, High Human Development, Medium Human Development and Low Human Development.
Body Mass Index (BMI) Another aspect of development is Body Mass Index. It is used determine a person's weight in regard to
his height which as a result shows whether a person is underweight, has normal weight, is overweight or obese.
The formula is BMI = kg/m² where kg is a person's weight in kilograms and m² is their height in metre square.

Following are the categories of BMI values:

(i) Less than 18.5 = Underweight or under nourished person
(ii) (ii) Between 18.5-24.9= Normal weight person
(iii) (iii) Between 25-29.9= Overweight person
(iv) (iv) 30 or greater than 30 = Obese person
 SUSTAINABILITY OF DEVELOPMENT

• → Sustainable Development refers to development of human with at the same time

sustaining the ability of natural system.
• → It is helpful to fulfils the needs of the human being without harming the ability of the
future generation.
• → For sustainable development, we have to use non-renewable resources like carbon based
originally designed fuel for the quantity how much we needed.
• → Some renewable resources like groundwater will take long time for replenished. So, we
should use that resource in finite quantity.