Introduction to Economic Development:

Economic Development is the process of the transformation from low-income

economies into high-income, modernized economies. This reflects the increment from people
having limited resources to people having greater resources. Moreover, the government focuses
and gives major importance on economic development as it enhances our standard of living
through creation of job opportunities and increasing employment, the support of renovation and
innovation, and the creation of an overall better quality of life.

There might be confusion in between economic growth and development for they can be
used interchangeably. Economic growth focuses on numbers; it depicts positive change in the
measurement of actual economic output like GDP. Meanwhile, the scope of economic
development is much broad as it includes aspects like social welfare, early childhood education,
and criminal justice reform. Infrastructure constructions and improvement, upgrading our
education system and maintaining and strengthening our public safety through fire and police
service are some of the objectives towards achieving economic development. The end game of
economic development is not just growing the economy, but growing it in a way that improves
the quality of life for everyone.

Three major areas where economic development is categorized:

1. Governments working on huge economic goals such as increasing employment.

2. Programs that provide infrastructure and services such as road or highway widening,
community parks, improved and modernized school programs and facilities, public
libraries or pools, new hospitals, and crime prevention initiatives.
3. Workforce development programs as aid in helping people acquire the needed skills and
education needed for job creation and business.

Pressing Issues and Challenges:

 Structural constraints are where problems faced by developing countries revolve. One of
these is geography while other common constraints on development are high economic poverty,
hunger, high mortality rates, unsafe water supplies, poor education systems, corrupt
governments, war, and poor sanitation. The World Bank has this so called “poverty traps” and
the collaboration of these constraints is what we must break in order for countries to develop. It
is recommended by them for countries to concentrate on six areas to improve chances of
development: Investment in education and health, increasing productivity of small farms,
improving infrastructure (e.g. roads), developing an industrial policy to promote manufacturing,
promoting democracy and human rights, and ensuring environmental protection.

Millenium Development Goals

There are eight goals that have been agreed upon by all 191 UN member states to try to
achieve by the year 2015, this is the so-called United Nations Millennium Development Goals.
In September 2000, The United Nations Millennium Declaration was signed in commitment of
world leaders to combat poverty, hunger, disease, illiteracy, environmental degradation, and
discrimination against women. The Millenium Development Goals are originated from this
Declaration, and all have specific targets and indicators.

The Eight Millennium Development Goals:

To eradicate extreme poverty and hunger

Goal: To decrease by half the proportion of people living on below one dollar a day and people
who suffer from hunger by 2015
Complications of poverty could be associated with the availability, accessibility, quantity
and quality of water. Boosting the access of poor people to water could be a prospect to make a
substantial contribution towards eradicating poverty - this is in accordance to the World Water
Development Report. The quick population growth plays a vital role to people suffering from
under nourishment. Huge number of undernourished people is those residing in environmentally
degraded rural areas and in urban slums. Some major causes of undernourishment includes war
and natural disasters (e.g. floods and droughts)

To achieve universal primary education;

Goal: All boys and girls complete a full course of primary schooling by 2015
It is significant for children to undergo primary schooling as it provides basic
understanding of different subjects that will develop their cognitive as well as physical and
mental growth that they could use throughout their lives. Children being affected by hunger and
malnutrition has seriously influenced their learning ability. With that being said, the addressing
of primary education should be of the same time as the addressing of food security. Through this,
people will have the capacity to overcome hunger, poverty, and at the same time illiteracy.

To promote gender equality and empower women;

Goal: Eradicate the disparity of gender in primary and secondary level by 2005, and at all levels
by 2015
We should promote the unlocking of women’s potential by giving them equal
opportunities in education as well as employment. We all know that beforehand, women only
stays at home to do household duties but in this generation, women are engaged with labor and
education – this is because when women are provided with opportunities, they could be agents of
change. Higher employment in women would depict more earnings for families and would boost
productivity.

To reduce child mortality;

Goal: Reduce mortality rates of children under-five by two-thirds
Under nutrition is said to be part of deaths in children under five. To increase the
chances of them growing into adults, efforts in improving household food security and
nutrition is a must.

To improve maternal health;

Goal: To reduce the maternal mortality ratio by 75 percent and to achieve access to
reproductive health
Proper diets, basic health services, and safe water and sanitation facilities during
pregnancy and childbirth are of key importance during pregnancy and childbirth. Through
improvements and engagement in these, women who died due to complications while being
pregnant could be prevented.
To combat HIV/AIDS, malaria, and other diseases;
Goal: To reverse the spread of HIV/AIDS and other major diseases like malaria and also to
secure global access to treatment for HIV/AIDS
The security of food and nutrition along with combating malnutrition can decrease the
vulnerability to disease. Also, proper implementation of sex education in a global setting
would help in raising awareness.

To ensure environmental sustainability;

Goal: Merging of sustainable development principles into every nation’s policies and also the
reverse of the diminution of environmental resource, reduce loss in biodiversity, to lessen into
half the population without access to clean and safe drinking water/sanitation and to achieve
improvement in the lives of those who are extremely poor.
Managing ecosystem and natural resources sustainably is a must to ensure that people’s
food requirements and needs are met.

To develop a global partnership for development.

Goal: Progress a global partnership for development & avail benefits of new and advanced
technologies
This deals with the addressing of special needs of least developed countries and also
those of living in small islands. Also, it talks about the access of affordable drugs in the world
in collaboration with the pharmaceutical companies. It also talks about the dealing with debt
problems of developing countries

What has been achieved on some of the targets within each goal:

MDG 1: From 1.9 billion in 1990, the number of people living on below $1.25 each day has
been reduced to 836 million in 2015. Halving the proportion of people suffering from hunger
which was the main objective was narrowly missed.
MDG 2: The goal of achieving universal primary education has just been missed, but the
primary school enrolment figures have shown an impressive rise with the net enrolment rate
expanding from 83% in 2000 to 91%.

MDG 3: Gender parity in primary education have been achieved by about two-thirds of
developing countries

MDG 4: The target of lowering upto two-thirds has been failed to be achieved, but the child
mortality rate has lessen by more than half over the past 25 years – decreasing from 90 to 43
deaths per 1,000 live births

MDG 5: The global maternal mortality ratio has lessen by nearly half – failing to meet the two-
thirds reduction which is aimed in the MDG

MDG 6: In between 2000-2013, the number of new HIV infections dropped by around 40%.

MDG 7: The objective of halving the proportion of people without access to improved sources
of water was achieved in 2010 for some 2.6 billion people have obtained access to refined
drinking water.

MDG 8: Overseas development assistance from rich nations to developing countries increased
by 66% in real terms, between 2000-2014.

Sustainable Development Goals

The Sustainable Development Goals which is also known as the Global Goals, serves
as a wake-up call for actions needed to combat poverty, protect the planet and ensure
people’s welfare. This is composed of 17 goals build on the successes of the Millennium
Development Goals, while introducing and including new components of global challenges
we are currently facing such as climate change, economic inequality, innovation, sustainable
consumption, peace and justice, among other priorities. The goals are connected with each
other, which means that the achievement of one goal means it affects achievement of another.
The SDG covers issues that affects all people may it be local or international to make sure that
no one gets left behind.
17 Goals of Sustainable Development Goals:

GOAL 1: No Poverty - Poverty can cause disability by being unhealthy and not having the
capability to cure sickness in the community that can cause to poor job performances. Disability
can cause poverty on the other hand by limiting the things a man can do to perform a particular
job and also to the economy of the community where they belong.

GOAL 2: Zero Hunger - Double the productivity of all agricultural company and even with the
small agricultural businesses to help produce foods. Improve food production systems and teach
agricultural practices to increase production and help maintain the ecosystems.

GOAL 3: Good Health and Well-being - Reduce global health problems and spread awareness
about all diseases and to prevent abusing substances that can cause psychological disorder.

GOAL 4: Quality Education - Everyone says education can end up poverty but the quality
should be considered. The quality education can help people’s lives not only by studying, but the
quality of the education is more than a thing that can change people’s way of thinking to a better
future for them.

GOAL 5: Gender Equality - Avoid discriminations, sexual harassment, sexual abuse, and other
types of disrespectful doings to all women to public and private places.

GOAL 6: Clean Water and Sanitation - Improving water quality suitable for drinking, reduce
water pollution, minimize dump, chemicals and other harmful substances and materials.

GOAL 7: Affordable and Clean Energy – We must be inclined into energy which do not emit
greenhouse gases for the future generation.
GOAL 8: Decent Work and Economic Growth – Encouraging entrepreneurship would be
helpful in eliminating dirty works such as selling of illegal drugs and slavery
GOAL 9: Industry, Innovation and Infrastructure – Technological development facilitates
investment in research for new ideas of products, aids in the manufacturing process and also
helps in mass transport.
GOAL 10: Reduced Inequality – Equity is a must to provide equal opportunities to people
living in different levels of lifestyles.
GOAL 11: Sustainable Cities and Communities – Sustainable cities tackles about the creation
of business opportunities and investing in good public means of transportation.
GOAL 12: Responsible Consumption and Production – We must be mindful of the proper
disposal of wastes, and must not practice throwing in bodies of water or in inappropriate areas;
3R is important so we could prevent wastes from causing harmful effects.
GOAL 13: Climate Action – Do not participate in man-made contributions in greenhouse gases
such as burning fossil fuels.
GOAL 14: Life Below Water – Protect lives underwater and manage ocean-based resources by
not littering and by not using methods of dynamite fishing when fishing.
GOAL 15: Life on Land – We must not be engaged in contributing to the loss of habitats of
wildlife; we must not illegally cut down trees or engage in deforestation for purposes of turning
it into subdivisions or government interests for these are our natural resources and of big help
during disasters such as preventing flood,
GOAL 16: Peace and Justice Strong Institutions – Strengthen the promotion of human rights,
equal rights for poor and wealthy people and also reduce violence by improving justice system
and police power
GOAL 17: Partnerships to achieve the Goal – Countries must be interconnected with each
other to lend a helping hand in achieving national and international targets as a whole, also to
tolerate international trades and coordinate ideas for innovations and policies for maintenance of
peace and security in a global setting.

Basic Indicators of Development / Growth Determinants

1. Gross Domestic Product – total amount of money a country makes from final goods and
services produced annually.

2. Gross National Product (GNP) – it is the GDP of a nation in collaboration with any money
gained by investment abroad subtracted by the profit earned by non-nationals residing within the
nation.

3. Gross National Product Per Capita - GNP divided by population; usually expressed in US
Dollars and is common index for development measurement.
4. Birth and death rates – generally, it is a measurement and evaluation of the state of
healthcare and welfare in a country.

5. Human Development Index – as discussed below

6. Literacy Rate – rate of people who are able to read and write, and also to comprehend are of
major importance in determining the state of education (which promotes productivity and
creativity, also entrepreneurship and advancement of technologies). It gives the skills and
learning people need towards prosperity

7. Infant Mortality Rate – number of deaths per 1,000 live births that is often caused by
environmental barriers, birth defects and also the maternal pregnancy complications.

8. Life expectancy – state of public health and welfare quality in a rural or urban areas, level of
sanitation and aiding assistance for the elderly.

9. Real income – income in consideration of the effects of inflation or purchasing power – it

refers to the amount of goods and services that can be purchased

10. Health – health is wealth for without it, productivity isn’t possible; also it is the core of a
human’s well-being and happiness

Purchasing Power Parity

Purchasing power parity is one of the known macroeconomic metric used by analysts that
is intended for comparison of economic productivity and standard of living between two
countries. This theory proposes that the exchange rate between countries should even out so that
goods could be procured at the same cost in any country/

This theory delineates that arbitrage opportunities – the income derived from price
differences across countries, should not be tolerated. Proposing the same price for identical
goods is what “The Law of One Price” is depicting, it is said that the PPP is based on this theory.
It tolerates eliminating the different price levels between countries.

The formula for relative PPP is: S = P1 / P2

S = the exchange rate of currency A to currency B
P1 = the cost of good “x” in currency A
P2 = the cost of good “x” in currency B

Example: One American citizen visits a market in India. 25 cupcakes were bought by the visitor
for Rs.250 and conclude that cupcakes are quite cheaper in that country. The visitor thought that
on an average 25, such cupcakes cost $6. Calculate PPP.

PPP formula = Cost of 25 cupcakes in Rs. / Cost of 25 cupcakes in USD

The PPP ratio of the exchange for cupcakes is USD1 = INR41.67 (250/6)

New Human Development Index

An instrument is developed by the UN to evaluate and rank countries' levels of

development in terms of societal and economical – this is called the Human Development Index.
The HDI was produced to highlight that people together with their potential should be the utmost
criteria for evaluating and assessing countries’ development, not just the economic growth alone.
This can also be used to cross-examine policies of each nation whereby we can ask about how
two countries with the same level of gross national income per capita can actually result to
contrasting outcomes in human development. Debate about government policy priorities can be
kindled by these said differences. In addition, the Human Development Index is a concise
measure of average accomplishment in aspects of human development: a long and vigorous life,
being educated or being knowledgeable and having a decent living. These are the three
dimensions wherein life expectancy at birth is the indicator of the health dimension, expected
and mean years of schooling is the indicator of the education dimension and gross national
income per capita is the indicator of the standard of living dimension. The HDI encompasses
only the aspects in relation of what human development entails. It does not talk about poverty,
inequalities, empowerment, etc.
Who are the developing countries? What are their general characteristics?

Developing countries are those nations that have low living standard and low HDI. These
are countries which reflect poor governance that results to extreme poverty, economic instability,
low employment rates and also high mortality rates and lack of basic resources in comparison to
other countries. They are the nation where the average income is lower than in developed
nations. These countries have also been called underdeveloped nations. Most of them are
existing in Africa, Asia, and Latin America.

1. Low per capita real income

Low per capita real income is one of the known attributes of developing economies. They
endure from low per capita real income level, which means they have small savings and small
investment and it is because the average person doesn’t earn sufficient money. Thus, poverty
begins to arise where most of the population struggles to escape. It could be because of lack of
resources.

2. High population growth rate/size

From this, we can learn to appreciate the importance of having sex education in the
curriculum of secondary and tertiary education because lacking knowledge about this may result
to contribution in the never-ending high population issue. Lack of family planning is also one of
the roots of this major issue we are currently facing and also the common belief of having more
children in the family could result in a higher labor force to earn income.

3. High rates of unemployment

This can result from the structural employment or mismatch of skills to job qualifications,
cyclical unemployment where rate of employment is fluctuating depending on the cycle of
business just like for example workers lose their jobs when business encounters downturns, it is
temporary and it depends on length of contractions, and frictional unemployment where there is
time lag because of transition from one job to another or searching for job (e.g. quitting,
termination)
4. Dependence on primary sector
It is said that low-income forms part of 75% of population and they are those residing in
rural areas. This results to low productivity on other aspects of economy and also lack of modern
industrial growth. If most of people are engaged in agriculture sector, we cannot achieve self
reliance in other sectors like medicine, education, accountancy and other academic-related jobs.

5. Poor access on technology

Access to technology can have many edges for it helps economies in developing
countries by reducing the costs of production, encouraging growth of new business and
advancing communication.

6. Low level of industrialization

This result to decrease in productivity, for not being engaged in industrialization disables
fast production of large variety of products.

7. Adverse geography

Developing Countries: Afghanistan, Maldives, Georgia, India, South Africa, Ukraine, Nigeria,
Ghana, Vietnam, Venezuela, Haiti, Kenya, Jamaica, Jordan, Mexico, Lebanon, Ecuador,
Guatemala, Turkey, Sri Lanka, Peru, Philippines
SOURCES:

(https://www.sciencedirect.com/topics/social-sciences/economic-and-social-development),
(https://study.com/academy/lesson/what-is-economic-development-definition-examples.html),
(http://www.globalization101.org/problems-of-development-today/),
(https://www.mdgmonitor.org/millennium-development-goals/),
(https://www.undp.org/content/undp/en/home/sustainable-development-goals.html),
(https://www.investopedia.com/updates/purchasing-power-parity-ppp/),
(https://www.wallstreetmojo.com/purchasing-power-parity-formula/),
(https://www.investopedia.com/terms/h/human-development-index-hdi.asp),
(https://en.wikipedia.org/wiki/Developing_country)

https://www.igi-global.com/dictionary/cyber-capability-framework/7401

https://content.wisestep.com/unemployment-causes-effects-solutions/

https://economicsconcepts.com/common_characteristics_of_developing_countries.htm

https://isge2018.isgesociety.com/registration/list-of-developing-countries/

https://www.tutor2u.net/geography/reference/the-8-key-gap-indicators-of-development

https://www.undp.org/content/undp/en/home/sustainable-development-goals.html