Economic Development

Introduction

• Economic development is the process whereby an economy’s real national income as well as per capita income increases over a long period of time. 
• It is also the process whereby simple, low-income national economies are transformed into modern industrial economies. 
• Economic Development creates the conditions for economic growth and improved quality of life by expanding the capacity of individuals, firms, and communities to maximize the use of their talents and skills to support innovation, lower transaction costs, and responsibly produce and trade valuable goods and services.

Key Points: Economic Development

• Economic Development involves rise in the level of production in an economy along with the advancement of technology, improvement in living standards and so on.
• The scope of economic development is improvement in life expectancy rate, infant mortality rate, literacy rate and poverty rates.
• Economic development implies an upward movement of the entire social system in terms of income, savings and investment along with progressive changes in socioeconomic structure of the country (institutional and technological changes).
• Economic development is a qualitative measure.
• Human Development Index (HDI), Gender- related index (GDI), Human poverty index (HPI), infant mortality, literacy rate etc. are the matrics to display economic development.
• Economic development is more relevant to measure progress and quality of life in developing nations.
• Economic development is a normative concept i.e. it applies in the context of people’s sense of morality (right and wrong, good and bad). 
• Development relates to growth of human capital indexes, a decrease in inequality figures, and structural changes that improve the general population’s quality of life.

Characteristics of a Developed Economy 

• A developed economy is the characterised by increase in capital resources, improvement in efficiency of labour, better organisation of production in all spheres, development of means of transport and communication, growth of banks and other financial institutions, urbanisation and a rise in the level of living, improvement in the standards of education and expectation of life, greater leisure and more recreation facilities and the widening of the mental horizon of the people, and so on. 
• In short, economic development must break the poverty barrier or the vicious circle and bring into being a self-generating economy so that economic growth becomes self-sustained. 
• The main characteristics of developed economies are as follows: 
• Significance of the Industrial Sector
• High Rate of Capital Formation
• Use of High Production Techniques and Skills
• Low Growth of Population

Difference between Economic Growth & Economic Development