Revision Notes

Economics

Chapter 1 Development

Idea of Development

Development involves many questions for better life and the ways in which one can work to achieve goals. Different persons can have different goals and what may be development for one person may not be development, or may even be detrimental, for the other.

Development is defined as the people’s economic growth, along with the growth of their basic needs like education, health, lifestyle, etc.

The main aim of development is to update as per the demand of time.

For example: to generate electricity, a dam is constructed over a river where nearby mass is considered for construction resulting in the development of society and country.

It causes destruction for farmers and the lives of people living nearby.

Income and Other Goals

Generally, people desire to have regular work, better wages and good price for the crops they produce. Apart from earning more income, one may expect to have a better quality of life. The quality of life depends on non-material things such as equal treatment, security, respect for others and freedom in society. For example, women may tend to work in a variety of jobs or start a business to receive a sense of security and freedom in the household and in society.

National Development

The idea about the national development of a country tends to vary and conflict from person to person. To determine whether the country is developed or underdeveloped, one needs to consider the characteristics of a country. Let us consider income as one of the important attributes to compare countries. If a country has a higher income level than other countries, then it is said to be a well-developed country. Therefore, the average income or the per capita income of a country is measured to compare the developmental status of different nations.

How to Compare Different Countries or States?

To compare countries, their income is considered to be one of the most important attributes. Countries with higher income are more developed than others with less income. As different countries have different populations, comparing total income will not tell us what an average person earns. So, we compare the average income of countries.

Average income is the total income of the country divided by its total population. It is also called per capita income.

Average Income = Total Income of Country / Total Population of Country

In World Development Reports, per capita income is used in classifying countries.

Countries with per capita income of US$ 49,300 per annum and above in 2019, are called high income or rich countries and those with per capita income of US$ 2500 or less are called low-income countries.

Per Capita Income

The per capita income is the total income of the country divided by its total population. Countries with a per capita income of Rs 4,53,000 per annum and above are called rich countries, and countries with a per capita income of Rs 37,000 per annum or less are called low-income countries. In 2004, India was considered a low-income country because its per capita income was just Rs 28,000. In 2006, the World Development Report to classify countries was based on the average income criterion.

Per Capita Income of Selected States

StatePer Capita Income for 2017-18 (in Rs)
Haryana2,03,340
Kerala1,84,000
Bihar38,631

If per capita income were to be used as the measure of development, Haryana will be considered the most developed and Bihar the least developed state of the three. However, this is not true, if we look at the other criteria.

Income and Other Criteria

According to the Reserve Bank of India, 2011, the per capita income of Delhi has the highest per capita income and Bihar has the lowest per capita income. While looking at other indicators such as the literacy rate and mortality rate, the literacy rate of Kerala was 93.9%, the highest among these states.

Human development Index

It is a composite Index prepared by United Nations Development Programme (UNDP) through its Annual Human Development Report published every year. Major parameters such as longevity of life, levels of literacy and Per capita income are used to measure the development of countries. World countries are ranked accordingly in to Very High Developed countries, High Developed countries, Medium Developed countries and Low Developed countries.

  • Infant Mortality Rate: The number of children that die before the age of one year as a proportion of 1,000 live birth in that particular year.
  • Literacy Rate: It measures the proportion of literate population in the 7 and above age group.
  • Net Attendance Ratio: It is the total number of children of age group 6-10 attending school as a percentage of total number of children in the same age group.
  • Body Mass Index: (BMI) one way to find out if adults are undernourished is to calculate Body Mass Index. Divide the weight of a person (in kg) by the square of the height (in metres). If this figure is less than 18.5 then the person would be considered undernourished. If this BMI is more than 25, then a person is overweight.

Public Facilities

Income is not an adequate indicator of material goods and services which the people are to use. In many regions, education, health and sanitary facilities are not adequately available to educate and prevent from infectious diseases. Kerala has a low infant mortality rate because it has adequate public facilities. The nutritious status will be low in states in which the public distribution system does not function properly.

  • The level of income is an inadequate measure of the level of development; therefore, other indicators such as health and education are used to compare a country’s development.
  • Human Development Report published by UNDP compares countries based on the educational level, health status and per capita income.

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Sustainability of Development

The renewable resources are replenished by nature. Let us consider groundwater. If we use groundwater more than what is being replenished by rain, then this resource would be overused. Non-renewable resources are those which will get exhausted after few years of use. Environmental degradation is no longer region or nation-specific.

Sustainable development is the development which looks into the requirement of the present and builds scope for the future generations. There are many works in progress for sustainability of development.

  • Infant Mortality Ratio: Infant Mortality Ratio indicates the number of children who die before the age of one year, as a proportion of 1000 live children born in that particular year.
  • Literacy Rate: Literacy Rate measures the proportion of literate population in the 7 and above age group.
  • Net Attendance Ratio: It is the total number of children of age group 14 and 15 years who attending school as a percentage of total number of children in the same age group.

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