Chapter No: 01

“Developing Economy and its

Characteristic”

BY MADAM PARAS CHANNAR

 Chapter outline

 What is Economic Development?

 Economic Growth.
 Main measures of Economic Development.
 Problems related to the measures of Economic
Development of Pakistan.
 Human Development.
 Common Characteristics of Developing Countries.
 Characteristics of Developed and Developing
countries.
 WHAT IS ECONOMIC DEVELOPMENT

Before 1970’s (Mair and Baldwin) “Ecomoic

development is the process whereby an economy’s real
national income increase over a long period of time
and if the rate of development is greater than the rate
of growth of population, than per capita real income
will increase ”
In 1980’s the problems of wide spread poverty,
unemployment, and unequal distribution of income
came to the forefront.
 According to Daudley seer, “the questions to ask
about a country’s development are therefore;
 What has been happening to poverty?
 What has been happening to unemployment
 What has been happening to inequality”
If all these three have decline from high levels, than
beyond doubt, there has been a period of
development for the country concerned, or vise versa
1990’s the modern economists are of the view that
economic development is the development of the
people rather than development of things.
 According to Micheal Todaro, “Development must be
conceived of as a multi dimensional process
involving in major changes in social structure,
popular attitudes and national institutions as well as
acceleration of economic growth, the reduction in
inequalities and poverty. In brief, economic
development means economic growth couples with
the structure changes in the economy for obtaining a
better life. ”
 OBJECTIVES OF DEVELOPMENT

 Provision of basic needs

 Raising level of living
 Expanding the range of economic and social choice.
 ECONOMIC GROWTH

According to Michael Todaro, “Economic growth is the

steady process by which the productivity capacity of
the economy is increased overtime to bring about
raising levels of national output and income”
 ELEMENTS OF ECONOMIC GROWTH

 Long term process

 Raise in real per capita income
 Rise in productivity
 Greater equalities

Sources of economic growth

1. Supply factors
2. Demand factors
3. Factor of production
ECONOMIC GROWTH AND PPF/PPC
 BENEFITS OF ECONOMIC GROWTH

 It help in raising the material standard of living of

the people.
 It allow the economy to have more consumer and
capital good.
 It increase the employment opportunities.
 It reduce government cost associated with
unemployment benefits and medical aids etc..
 Cost of government: as more goods are manufacture, it
produce, air, water pollution, noise, traffic jams, rural and
urban congestion, smoke, ugly landscape, garbage.
 MAIN MEASURESE OF ECONOMIC
DEVELOPMENT

 Increase on real GNP

 Increase in real per capita income
 Raise in overall well being of the people
 Basic need approach
 Human development index
 Other divers indicators
 Per capita consumption of energy
 Percentage of starches in total calories consumed
 Degree of urbanization, high school enrollment ratio
 Infant mortality and density of population
 Problem related to measures of economic
development of Pakistan

 Increase in real GDP

 The Pakistan describe as having a strong economic growth rate
that started in 2013-14 has accelerated in 2017-18.
 GDP continued to grow above 5 percent in each of the last 2
years reaching 5.79 percent, highest in 13 years in the out
going fiscal year FY2018 and 4 percent in each of the three
preceding years.
 GDP (Total of agriculture(A) + Industrial sector(B)+ service
sector(C))
 Shown in given figure
 GROWTH RATE

SECTORS 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

A.Agriculture
B. Industry
C. Services
Total(A+B+C) 3.68 4.05 4.06 4.56 5.37 5.79
 Sectors Shares percentage in GDP

Sector 2015-16 2016-17 2017-18

Agriculture 19.84 19.22 18.86
Industry 20.90 20.91 20.91
Services 59.26 59.87 60.23
Cont….

 Increase in per capita income:

Fiscal years Per capita income
2007-08 $1,053
2008-09 $1,026
2009-10 $1,072
2010-11 $1,274
2011-12 $1,321
2012-13 $1,334
2013-14 $1,389
2014-15 $1,557
2015-16 $1,561
2016-17 $1,629
2017-18 $1,641
 Human Development

 According to Dr. Mahbub-ul-haq, “ The process of

enlarging people choices as well as raising the level
of well being already achieved.
 Why human development is considered
necessary?

 The objective is to improve human conditions, which can

achieved by enlarging the people choices such as knowledge,
health, political freedom, access to pleasure of life and other
necessary resources.
 Human development is an important source of higher
productivity in all sectors of the economy.
 Health Education Well Skilled Increase productivity

 The improvement in eduaction level, and health facilities can

reduce the infant mortality, fall in family size..
 The low population growth and low population density
generally create healthy physical environment.
 Human development helps in reducing civil disturbances and
in increasing political stability in the society.
 Main components of human development

 According to Dr. Mahbub-ul-haq;

 Equity

 Sustainability

 Productivity

 Empowerment
 Human development strategy in Pakistan

 Literacy Rate has increased 56% in 2007-08 upto

58% in 2015-16.
 Human Development index:
 Norway has top ranked among 20 developed
countries.
 Pakistan stands at 147th
 India stands at 131th.
 Bangladesh stands at 139th among the 188 countries.
Common characteristics of developing countries

 Burden of international debt.

 Low per capita income
 Unproductive use of funds
 Inappropriate investment decisions.
 Agriculture, the main occupation.
 Under utilization of natural resources.
 High rates of population growth
 Unemployment
 Low level of productivity
 Lack of enterprise and initiative.
 Cont..

 Deficiency of capital
 Backward state of technology
 Dependency on export for primary goods
 Unskilled worker
 Brain drain
 Government controlled by wealthy person
 Characteristics of developed versus developing
countries

 GNP per capita

Developed GNP per Developing GNP per

countries capita income Countries capita income
USA 58,030 Bangladesh 3,790
Germany 49,530 Pakistan 5,580
France 42,380 India 6,490
Canada 43,420 China 15,500
 Cont..

 Consumption of world output

 Utilized and underutilize resources
 Vicious circle of poverty
 Population
 Life expectancy
 Secondary school enrollment
 Percentage of population in urban areas
 Population below the poverty line
 Voicelessness and powerlessness of people
 Inequility in income
 Market economies.