Development

Notes on Chapter 1 Economics: Development

Introduction to Development

Development is a complex concept that goes beyond mere economic growth. It encompasses:

Development involves thinking about fundamental questions such as:

Key Insight: Development is not a one-size-fits-all concept. Different individuals and groups may have varying perspectives on what constitutes development.

Different Perspectives on Development

Development goals vary across different groups:

Important Observation: What constitutes development for one group might be destructive or undesirable for another.

Development encompasses more than just monetary aspects:

Measuring Development: Beyond Income

Traditionally, per capita income was the primary measure of development. However, modern approaches recognize multiple indicators:

Critical Understanding: Income alone cannot measure a country's comprehensive development. Other social and human-centric factors are equally important.

Examples demonstrating limitations of income-based measurement:

Human Development Index (HDI)

HDI introduced by UNDP provides a more holistic development assessment based on:

Global Perspective: Comparing countries like Sri Lanka, India, Myanmar reveals complex development dynamics.

Sustainability of Development

Modern development thinking emphasizes sustainable progress, considering:

Key Challenge: Current development models must balance economic growth with environmental sustainability.

Critical sustainability considerations:

Important Terminology

  1. Per Capita Income: Total income of a country divided by its total population
    • Formula: Total National Income รท Total Population
    • Calculated in US dollars using Purchasing Power Parity (PPP)
  2. Human Development Index (HDI): Composite statistic measuring:
    • Per capita income
    • Life expectancy
    • Mean years of schooling
  3. Literacy Rate: Proportion of literate population in the 7-and-above age group
  4. Infant Mortality Rate (IMR): Number of children dying before age one per 1,000 live births
  5. Net Attendance Ratio: Percentage of children in a specific age group attending school

Limitations of Average Income as a Development Criterion

Critical Analysis of Per Capita Income
  1. Income Distribution Inequality

    Example from the textbook: Two countries with same average income

    • Country A: More equitable distribution (all citizens earn close to average)
    • Country B: Extreme inequality (one person very rich, others very poor)
  2. Non-Monetary Aspects of Development
    • Quality of life beyond monetary measures
    • Access to healthcare, education, and public facilities
    • Social security and individual freedoms
  3. Inadequate Representation of Well-being

    Comparative Example: Haryana vs. Kerala

    • Haryana: Higher per capita income
    • Kerala: Better health and education indicators
    • Lower infant mortality rate
    • Higher literacy and school attendance

World Bank Development Classification

Classification Criteria

  1. Per Capita Income Thresholds (2019)
    • High-Income Countries: US$ 49,300 and above per annum
    • Low-Income Countries: US$ 2,500 or less per annum
    • India: Low Middle-Income Category (US$ 6,700 per annum)
  2. Calculation Method
    • Uses Purchasing Power Parity (PPP)
    • Standardizes income across different countries
    • Ensures comparable purchasing power

Environmental Challenges in Development

Sustainability Concerns
  1. Groundwater Overuse
    • 300 districts report water level decline over 4 meters in 20 years
    • Nearly one-third of country overusing groundwater reserves
    • Projected: 60% overuse in another 25 years
  2. Non-Renewable Resource Depletion
    • Crude Oil Reserves Analysis
    • Global reserves expected to last only 50 years
    • Different countries face varying resource challenges
  3. Key Environmental Sustainability Issues
    • Resource conservation
    • Ecological balance
    • Intergenerational responsibility

Examination Question Bank

Multiple Choice Questions

  1. Development of a country can generally be determined by:
    • Per capita income
    • Average literacy level
    • Health status of its people
    • All of the above
  2. Main criterion used by World Bank for country classification:
    • Per capita income
    • Literacy rates
    • Life expectancy

Descriptive Question Strategies

  1. Explain limitations of using per capita income as a development measure
  2. Discuss sustainability of development with environmental examples
  3. Compare development indicators of different countries/states
  4. Analyze non-monetary aspects of development

Critical Thinking Perspectives

Development Philosophical Approach:

Development is not just economic growth, but a holistic improvement in: