development economics 21-3-10

8/8/2019 Development Economics 21-3-10

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Development EconomicsDevelopment Economics

Dr. Abid Hussain Ch.Dr. Abid Hussain Ch.

Associate ProfessorAssociate Professor

Institute of Education andInstitute of Education and

ResearchResearchPunjab University New CampusPunjab University New Campus

[email protected]@yahoo.com


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Nature of Development EconomicsNature of Development Economics

Traditional Economics deals basically with the efficient,Traditional Economics deals basically with the efficient,least cost allocation of scarce productive resources andleast cost allocation of scarce productive resources andwith the optimal growth of these resources overtimes.with the optimal growth of these resources overtimes.

The traditional economics consists of economic theory ofThe traditional economics consists of economic theory ofclassical and noclassical and no--classical economists. It is concernedclassical economists. It is concernedwith advanced capitalistic world of perfect markets, freewith advanced capitalistic world of perfect markets, freeplay of forces of demand and supply; and making ofplay of forces of demand and supply; and making ofeconomic decisions on the basis of marginal privateeconomic decisions on the basis of marginal privatebenefit. Price mechanism and the goods market,benefit. Price mechanism and the goods market,

resource market and financial markets are cleared onresource market and financial markets are cleared onthe basis of demand and supply.the basis of demand and supply.


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The political economy is also a branch ofThe political economy is also a branch ofeconomics where a relationship is establishedeconomics where a relationship is establishedbetween politics and economics.between politics and economics.

The role of power in economic decision is alsoThe role of power in economic decision is alsoevaluated political economy also analyses theevaluated political economy also analyses thesocial and institutional process through whichsocial and institutional process through whichcertain group of economical and political elitescertain group of economical and political eliteslike feudal businessmen, industrialist, politicians,like feudal businessmen, industrialist, politicians,

trade unions and bureaucrats etc. influence thetrade unions and bureaucrats etc. influence thescarce productive resources either for their ownscarce productive resources either for their ownvestvest--interest or perhaps for the interest of theinterest or perhaps for the interest of thewhole economy.whole economy.


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Traditional economics deals basically with the efficient,Traditional economics deals basically with the efficient,least cost allocation of scarce productive resources andleast cost allocation of scarce productive resources andwith the optimal growth of these resources.with the optimal growth of these resources.

The traditional economics consists of economics theoryThe traditional economics consists of economics theoryof classical and no classical economists. It is concernedof classical and no classical economists. It is concernedwith advance capitalistic world of perfect market, freewith advance capitalistic world of perfect market, freeplay of forces of demand and supply and making ofplay of forces of demand and supply and making ofeconomics decisions on the basis of marginal privateeconomics decisions on the basis of marginal privatebenefits, price mechanism and the good markets,benefits, price mechanism and the good markets,

resource market and financial market are cleared on theresource market and financial market are cleared on thebasis of demand and supply.basis of demand and supply.


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Development Economics is beyondDevelopment Economics is beyondtraditional economics and politicaltraditional economics and political

economy. In addition to efficient allocationeconomy. In addition to efficient allocationand sustained growth of resources, itand sustained growth of resources, itdeals with economic, social, political anddeals with economic, social, political andinstitutional mechanism (both public asinstitutional mechanism (both public as

well as private) which could bring aboutwell as private) which could bring aboutrapid and large scale improvements inrapid and large scale improvements inlevels of living.levels of living.


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Development economics deals with povertyDevelopment economics deals with povertyalleviations measures standard of livingalleviations measures standard of livingimprovement method an creating a harmonyimprovement method an creating a harmonybetween the rich and the poor nations of thebetween the rich and the poor nations of theworld, rather just following the principles ofworld, rather just following the principles ofprofit maximization and selfprofit maximization and self--interest.interest.

It is concerned with the economic, cultural andIt is concerned with the economic, cultural andpolitical requirements which are necessary forpolitical requirements which are necessary for

structural and institutional transformations ofstructural and institutional transformations ofentire societies in a manner that the fruits ofentire societies in a manner that the fruits ofeconomic growth could be provided to theeconomic growth could be provided to thelargest segment of the society.largest segment of the society.


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Meaning of Economics developmentMeaning of Economics development The western experts were of the view that if real GNPThe western experts were of the view that if real GNP

and per capita GNP of a country increase over a longand per capita GNP of a country increase over a longperiod of time it would be given the name of economicperiod of time it would be given the name of economic

development. But later on, a lot of criticism was madedevelopment. But later on, a lot of criticism was madeagainst these measures of development. Then theagainst these measures of development. Then theeconomists engaged themselves in finding othereconomists engaged themselves in finding othermeasures of economics development.measures of economics development.

Accordingly the social and economic indicator approachAccordingly the social and economic indicator approachthe basic need approach and construction of the humanthe basic need approach and construction of the humandevelopment index approach have been introduced bydevelopment index approach have been introduced bythe economists and sociologists economic developmentthe economists and sociologists economic developmentthus in development and different measures which canthus in development and different measures which canbe employed to measure it.be employed to measure it.


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Scope of Development EconomicsScope of Development Economics

Problem of World PovertyProblem of World Poverty

Economics Development starts with the problem ofEconomics Development starts with the problem ofbackwardness and international poverty. It means whybackwardness and international poverty. It means whythe world has been divided into tow opposite poles.the world has been divided into tow opposite poles.

Why the Development gap between countries of theWhy the Development gap between countries of theworld is increasing.world is increasing.

It is economics development i.e how many areIt is economics development i.e how many aredeveloped countries, how many are countries atdeveloped countries, how many are countries at

international level, many are less developed countries.international level, many are less developed countries. We come across the salient feature of developing ofWe come across the salient feature of developing of

poor economics.poor economics.


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Model of Economic GrowthModel of Economic Growth

In development economics we comeIn development economics we comeacross a lot of models of economic growthacross a lot of models of economic growth

which present the picture of economicwhich present the picture of economicgrowth of western advanced countries.growth of western advanced countries.

In this respect we study the growthIn this respect we study the growthmodels.models.


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heories of Under DevelopmentTheories of Under Development

and Developmentand Development Development economics also presents a lot ofDevelopment economics also presents a lot of

theories regarding the under development of thetheories regarding the under development of thepoor countries as well as the theoretical meanspoor countries as well as the theoretical means

and ways through which the poor and backwardand ways through which the poor and backwardnations of the world can attain economicnations of the world can attain economicdevelopment the first set of theories is given thedevelopment the first set of theories is given thename ofname ofStructural TheoryStructural Theory of developmentof development

which states that the poverty of the poor nationswhich states that the poverty of the poor nationsis attributed to structural problems of the UDCs.is attributed to structural problems of the UDCs.


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Problems ofPopulationProblems ofPopulation

The population growth has led to create a lot ofThe population growth has led to create a lot ofproblem that is population in developingproblem that is population in developingcountries is rising faster that natural resourcescountries is rising faster that natural resources

and the capital accumulation.and the capital accumulation. Economic development which deals with theEconomic development which deals with the

issues of population growth its effects onissues of population growth its effects onproduction employment migration urbanizationproduction employment migration urbanization

and environment etc.and environment etc. Again development economics presents differentAgain development economics presents different

theories of population.theories of population.


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Theories of Under DevelopmentTheories of Under Development

and Developmentand Development The other theory is given the name ofThe other theory is given the name ofInternationalInternational

Dependencia ModelDependencia Model which states that it is thewhich states that it is thedeliberate behavior on the part ofDCs which exploiteddeliberate behavior on the part ofDCs which exploitedUDCs in such a way to keep them poor and backward.UDCs in such a way to keep them poor and backward.

The third theory of economic development is calledThe third theory of economic development is calledStage TheoryStage Theory where it has been told that the processwhere it has been told that the processeconomic growth and development is furnished witheconomic growth and development is furnished withcertain stages.certain stages.

The fourth major theory of economic growth is given theThe fourth major theory of economic growth is given thename ofname ofNEO Classic Counter Revolution TheoryNEO Classic Counter Revolution Theorywhich says that rather blaming international forces thewhich says that rather blaming international forces thepoor countries should depend upon free markets andpoor countries should depend upon free markets andprivatization for their economic growth.privatization for their economic growth.


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Dualistic TheoriesDualistic Theories

The poor countries is also attributed toThe poor countries is also attributed totheir dualistic character i.e. they have atheir dualistic character i.e. they have afew developed cities and so manyfew developed cities and so manybackward cities use of capital intensivebackward cities use of capital intensivetechnologies along with risingtechnologies along with risingunemployment.unemployment.

development economics 21-3-10

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