CHAPTER ONE

Session one; The Notion of Development

 Definitions of Development
 Development is an elusive term.
The concept has been understood differently in different time/
periods and by different persons. Its meaning has evolved
progressively to have the present meaning.
 In the 1950s and 1960s, for example, development was
considered as synonymous to economic growth. Accordingly,
in this period, it has been defined as the capacity of the
economy to generate and sustain fast growth rate of GDP (per
capital income
Jhingan (2007) defines development as economic growth plus
change.
The author sees development as being related to qualitative
changes in economic wants, goods, incentives, institutions,
productivity and knowledge or upward movement of the entire
social system.
According to Kindleberger (1965), economic development
implies both more output and changes in the technical and
institutional arrangement by which it is produced and
distributed.
In same vein, Friedman and Hansen (1972) define economic
development as an innovative process leading to the structural
transformation of social system.
Innovation and transformation of social system are the key
points in this definition. The definitions above imply that
development is about growth and change.
• Okun and Richardson (1962) also defined economic
development along the growth perspective as “a sustained,
secular improvement in material well-being, which we may
consider to be reflected in an increasing flow of goods and
services.

• In same vein, Rodney (2009) sees economic development as

a situation where members of a society jointly increase their
capacity for dealing with the environment.
• Todaro succinctly puts the definition of development as
follows: development is “conceived as a multi dimensional
process involving major changes in social structures,
popular attitudes, and national institutions, as well as the
acceleration of economic growth, the reduction of
inequality (and unemployment), and the eradication of
absolute poverty”.
 Core values of development
Denis Goulet distinguishes three basic components or core
values of development
Life-sustenance: life-sustenance is concerned with the
provision of basic needs.
No country can be regarded as fully developed if it cannot
provide its entire people with such basic needs as housing,
clothing, food and minimum education.
A major objective of development must be to raise people out
of primary poverty and to provide basic needs simultaneously
without which there is absolute under development
Self-Esteem: self-esteem is concerned with the feeling of
self-respect and independence.
 It means to be a person, a sense of worth and self-respect, of
not being used as a tool by others for their own ends.
Every society or individual strives towards self-esteem.
Without development the pride of the peoples of the
developing countries on their cultural identity and dignity are
being eroded.
Freedom from servitude: Freedom is ability of people to
determine their destiny.
It involves an expanded range of choices for societies and
their members together with a minimization of external
constraints in the pursuit of devolvement.
 No man is free if s/he cannot choose; if s/he is imprisoned by
living on the margin of subsistence with no education and no
skills
 The Objectives of Development
Whatever the specific components of these desirable changes
are, development in all societies must have at least the
following three objectives:
1) To increase the availability and widen the distribution of
basic life-sustaining goods such as food, shelter, and
protection.
2) To raise level of living standard. This involves in addition to
higher income, the provision of more jobs, better education,
and greater attention to cultural and human values, all of which
will serve not only to enhance material well-being but also to
generate greater individual and national self-esteem.
3) To expand the range of economic and social choices
available to individuals and nations by freeing them from
servitude and the dependence not only in relation to other
people and nation-states but also to the forces of ignorance
and human misery
 Criteria for Development
Based on the objectives of development, the
following can be said to be the criteria for
development:
1) Development must be people oriented.
2) It has to be a long term process.
3) Development creates the capacity for people to
be self reliant.
4) It must not be abstract that is, it must be
observable and measurable.
 Economic growth
What is economic growth?
The meaning of economic growth is unambiguous.
Almost all economists would accept the increase in the
output of goods and services of a country per unit time as
its definition.
To an economist, economic growth is the sustained increase in
the National Income (NI) or the total output of all goods and
services produced in an economy. It is an increase in the
capacity of an economy to produce goods and services,
compared from one period of time to another.
Kuznets (1973), a Nobel laureate in economics, defined a
country’s economic growth as “a long-term rise in capacity to
supply increasingly diverse economic goods to its population,
this growing capacity based on advancing technology and the
institutional and ideological adjustments that it demands.
Economic growth according to Todaro and Smith (2006), is the
steady process by which the productive capacity of the
economy is increased over time to bring about rising levels of
national output and income.
Economic growth therefore occurs whenever people take
resources and efficiently rearrange them in ways that make
them more productive overtime.
 Advantages and Disadvantages of Economic Growth.
• Advantages of Economic Growth
1. Higher living standards - since growth means a sustainable
increase in the total output of goods and services produced in a
country, consumers are able to enjoy more goods and services,
increased income and a general improvement in living standard.
2. Employment effects - growth stimulates more jobs in an
economy and this would address the issue of unemployment.
3. Lower government borrowing - economic growth boosts tax
revenues and provides the government with extra money to
improve public services such as education and healthcare. It
helps to reduce government borrowing and makes it easier for a
government to reduce the size of their budget deficit.
4. Environmental protection - growth can also help provide the
funds to protect the environment such as low-carbon investment,
innovation/research and development, in the use of more
efficient and environmental friendly production processes.
• Disadvantages of Economic Growth
1. Working hours – sometimes there are fears that a fast-growing
economy places increasing demands on the hours that people
work and can upset work-life balance.
2. Environmental issues - a fast growing economy can put
pressure on the environment in terms of depletion of the non-
renewable natural resources, and damage caused by
industrial/economic activities on the environment e.g. air, water
and noise pollutions.
3. Inequality- not all of the benefits of economic growth are
evenly distributed. There could be a rise in national output but
also growing income and wealth inequality in the society. There
could also be regional differences in the distribution of rising
income and spending.
4. Risk of inflation - if the economy grows too quickly, there is the
danger of inflation as spending would likely grow faster than
production.
 Economic Growth Economic Development

Definition The sustained increase in Economic Growth

the aggregate output or accompanied by desirable
supply of goods and social and institutional
services produced in a changes
country

Effect Quantitative: Brings about Qualitative and

quantitative increase in the
economy
Applicability/ Relevance Growth theories are
associated with developed
countries.
Quantitative: Brings about
qualitative and quantitative
changes in the economy
and society
Development theories are
specific to the developing
countries

Concept Narrower concept Broader concept

Measurement Increase in GDP per capita Human Development Index

(HDI)
 Determinants of Economic Growth
• The determinants of economic growth are factors that are at
work in an economy that give rise to the expansion of
production capacity through the fuller and more efficient
utilization of available production capacity.
• Economic Factors
Natural resources
Capital accumulation
Division of labor
Organization
Technological progress
Structural changes
• Non-Economic Factors
Political and Administrative Factors
Social Structure of Population
Human Capital and Cultural Traits
HAVE A NICE DAY