economic growth and development of nations, PERFORMANCE OBJECTIVES, At the end of this chapter, students should be able to;
Explain the concept of economic development and distinguish between economic growth and development. Explain the characteristics of an underdeveloped economy.. Explain the factors which influence economic development.
DEFINITION OF ECONOMIC DEVELOPMENT
growth and development of a nation may be defined as the process whereby the level of national production (that is national income) or per capita income increases over a period of time.
The main purpose of the economic development of nations is to raise the standard of living and the general well-being of the people in an economy.
ECONOMIC GROWTH AND DEVELOPMENT OF NATIONS PROCESS
Definition: Economic growth and development of nations may be defined as the process by which the productive capacity of an economy increases over a given period, leading to a rise in the level of the national income.
When there is economic growth, it shows in the form of an increase in income level, an expansion in the labour force, an increase in the total capital stock of the country, and a higher volume of trade and consumption.
DISTINCTION BETWEEN ECONOMIC GROWTH AND DEVELOPMENT OF NATIONS
There is a greater emphasis on the increase in output and less emphasis on economic welfare in the case of economic growth, whereas economic development lays more emphasis on improvements in the general welfare as a result of more equitable distribution of the increased output of goods and services among individuals.
While economic growth is mainly concerned with the growth of income, the economic development of nations reveals all aspects of economic activities and emphasizes a more even distribution of facilities between various areas.
In the growth and development of nations, there must be a meaningful increase in real income whereas in economic development, a measure of it can be achieved by a fairer distribution of existing goods and services even if there is no substantial increase in output.
ALTERNATIVE EXPLANATIONS OF ECONOMIC GROWTH AND DEVELOPMENT OF NATIONS
Many theories have been put forward to explain why some nations are developed and while others are underdeveloped. The main theories are:
Sociological Theory: This school of thought believes that economic growth and development is linked to certain characteristics of the people.
It emphasized that countries may become underdeveloped due to some negative characteristics such as lack of inventiveness, laziness, high rate of absenteeism and negative attitude to work.
A nation may be classified as being developed if it has the positive characteristics mentioned above.
Colonial background theory: This school of thought believes that nations become underdeveloped because they were at one time or the other colonized.
While the colonial masters prosper, leading to developed nations as a result of continued exploitation, the colonized nations become poorer resulting in under-development.
Climatic development theory: This school of thought believes that climate has a certain influence in the development of a nation.
It emphasized that countries associated with temperature climate are cool, and give rise to meaningful thinking, resulting in developed nations while those associated with too cold or too hot climates generally lead to underdevelopment.
Puritanical ethic theory: This theory was propounded by Weber. It believes that puritanical ethics is the brain behind the industrialised nations of the world.
It emphasised that self-discipline, abstinence, thriftiness, etc strengthened the incentive to work and save. The absence definitely leads to underdevelopment.