Growth and Development

Development
>Normative Concept
>Poverty
>Inequality
>Progress
>Sustenance
>Self Esteem
>Freedom
>Sustainable
>Primary/Secondary/Tertiary

Poverty is when you cannot afford basic needs or at least not comfortably. There
are 2 types of poverty, Absolute Poverty & Relative Poverty. Relative Poverty is when
a country has a base level of income and there’s a part of society which does not
meet that level, they may not be poor but they will not be able to have the same
quality of living someone at the standard of the country. Absolute Poverty is as
mentioned at the beginning, you cannot maintain the basic needs comfortably or at
all.

Primary – Agricultural
Secondary – Industry
Tertiary - Services

Growth
>National Income
>Gross Domestic Product (GDP)
>Real GDP vs Nominal GDP
>Gross National Product (GNP)
>Per Capita

Economic Indicator
An economic indicator is a piece of economic data, that is used by analysis to
interpret current or future investment possibilities. These indicators also help to
judge the overall health of an economy.

GDP
The final value of the goods and services produced within the geographic
boundaries of a country during a specified of time, normally a year.
GDP growth rate is an important indicator of the economic performance of a
country
GDP though composed of goods and services produced for sale in the market, also
includes some non-market production, such as defense.
GDP Per Capita = Total GDP/Total Population

GNP
Gross national product is a broad measure of a nation’s total economic activity.
GNP is the value of all finished goods and services produced in a country in one
year by its nationals.
GNP includes income earned by citizens and companies abroad, but does not
include income earned by foreigners within the country.
Ex – If a German-owned company has a factory in the United States, the output of
this factory would be included in US. GDP, but in German GNP
GNP = GDP + Net Income from Abroad

Development – A normative concept – open to interpretation and subjectivity

Single Indicator – A single indicator is used to measure the development of an
economy such as GDP or GNP.
Composite Indicator – This is used when you want to research on one area but just
one single indicator will not suffice so multiple single indicators are used. HDI is
the composite indicator which includes thing like economic development &
standard of living.
Drawback of GDP
The exclusion of non-market transactions
The failure to account for or represent the degree of income inequality in society
The failure to indicate whether the nations rate of growth is sustainable or not
The failure to account for the costs imposed on human health and the environment
arising from the production or consumption of the nations output.
Birth Rate is the number of live births occurring per 1000 of the population per
year of a given geographical area.
Death Rate is the number of deaths occurring per 1000 of the population per year
of a given geographical area
Infant mortality rate is the number of infants dying before reaching one year of age
per 1000 live births in a given year
High literacy rate (or low illiteracy rate) suggests he existence of an effective
primary and secondary education system or literacy programs that have enabled a
large proportion of the population to acquire and use basic literacy and numeracy
skills in daily life and to continue learning.
Human Development Index
- Long and Healthy Life
- Knowledge
- A decent standard of living
Income Inequality
Income inequality is how unevenly income is distributed throughout a population.
The less equal the distribution, the higher income inequality is. Income inequality
is often accompanied by wealth inequality, which is the uneven distribution of
wealth.

Causes of Income Inequality

- Failure of labor-intensive manufacturing in India
- Jobless growth in India
- Regional and inter-state disparities
- Lack of skill development
- Rigid social institutions like Caste
- Tax Evasion – Undue concentration of incomes in a few hands.
- Regressive Tax – Indirect taxes give maximum revenue to the government.
- Unemployment and underdevelopment and the consequent low productivity
of labor
- Failure to develop export-oriented industries
- Corruption
Gini Index – the principle of the Gini Index is that one person has everything and
the rest have nothing
Negative Externalities exist when individuals bear a portion of the cost associated
with a good’s production without having any influence over the related production
decisions.
It is basically the effect of one decision and how it influences the others. For
example, someone drives a car and another drives a scooter, the car produces some
amount of dust which affects the scooter driver who is bearing the cost of the car
drivers decision.
Unsustainable use of resources – Unsustainable consumption and production
practices not only deplete natural resources through the use of material inputs, but
also cause environmental impacts as a result of the extraction, processing,
manufacturing, consumption and waste disposal at every stage of a product or
service lifecycle.
Challenges faced by the developing countries
- Economic barriers
- Corruption and Political Instability
- Geographical Barriers
- HIVS and AIDS
Economic Barriers – An economic barrier are factors which limit the economic
growth of an economy.
- High Population Growth
- Low level of human factor
- Poor transportation network
- Lack of innovative solutions
Corruption and Political Instability
Corruption acts as an inefficient tax on business, ultimately raising production
costs and reducing the profitability of investments. Corruption may also decrease
the productivity of investments by reducing the quality of resource.
Impact of Corruptions
- Impacts on Productivity
- Poverty and Inequality
- Public and Private sector dysfunctionality
- Rigged economic and Political system
Political Instability
When there is an instability in the background of the political members/system.
When this occurs, corruption is highly present.

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