Tanya Bhatia is teaching live on Unacademy Plus
GROWTH AND DEVELOPMENT By Tanya Bhatia
oGrowth - Increase in national Income oDevelopment- Growth + Equality
Growth and Development 1.Growth is just 'getting bigger', whereas development is improvement. 2. Growth can be explained as becoming bigger or larger or having more importance. 3. Growth is termed as a physical change, where as development is said to be physical as well as social or psychological change. 4. While growth is related to quantitative improvement, development is related to quantitative as well as qualitative improvement 5. When the term growth is related to living beings, it can mean the increase in weight, height and bone seize. On the other hand, development is the process of developing skills and capacities. It deals with the behavioral aspect of a living being
Vicious Circle of Poverty o Nurkse explains the idea in these words- It implies a circular constellation of forces tending to act and react upon one another in such a way as to keep a poor Country in a state of poverty. For example a poor man may not have enough to eat, being under fed, his health may be weak. being physically weak his working capacity is low which means that he is poor, which in turn means that he is poor which in turn means that he will not have enough to eat, and so on. A situation of this sort relating to a country as a whole can be summed up in one line A country is poor because it is poor'
UNDERDEVELOPMENT Capital deficiency Low productivity Low investment Low income Low savings Fig. 3.2 The Vicious Circle Supply Side
Marxian Theory of Economic Development In Marxian theory, production means the generation of value. Thus economic development is the process of more value generating, labour generates value. But high level of production is possible through more and more capital accumulation and technological improvement. o At the start, growth under capitalism, generation of value and accumulation of capital underwent at a high rate. After reaching its peak, there is a concentration of capital associated with falling rate of profit. In turn, it reduces the rate of investment and as such rate of economic growth. Unemployment increases. Class conflicts increase. Labour conflicts start and there is class revolts. Ultimately, there is a downfall of capitalism and rise of socialism
C+V Multiplying numerator & denominator by V we get SV SC SC V (V+C) V (V+ C) SC S S C Sv - rate of surplus value O -Organic composition of capital.
The Schumpeter theory o Innovation may be defined as a change in existing production system to be introduced by the entrepreneur with a view to make profits and reduce costs. The innovation is closely linked with Schumpeterian concept of development. o He defined development as a "Spontaneous and discontinuous change in the channels of flow, disturbance of equilibrium which forever alters and displaces the equilibrium state previously existing". When changes take place in the economy, circular flow is disturbed and the development process starts. He assumed that change is the basic element of dynamic process, and those changes come in the form of innovations.
Innovations may consist of- o (a) The introduction of a new product o (b) The introduction of a new method of production o (c) The opening up of a new market o (d) The conquest of a new source of supply of raw materials or semi manufactured goods. o (e) The carrying out of the new organisation of any industry like the creation of a monopoly.
oQ1- A country is poor because it is poor are the words of- 1.Nurkse 2. Singer 3. Hicks 4.Mydral
oQ3-. The economist who wrote more about population o a) J.R. Hicks ob) Rodan o c) T.R. Mathus od) None of these
o Q5-What is the meaning of the term laissez faire o a) Government control b) Other things remaining the same o c) let the individual free o d) inverse relationship
oQ8 The Big push strategy is given by- 1.Rosenstein Rodan 2.Simon Kuznets 3.WA Lewis 4.A.0 Hirschman