Economic Development (Research report)

ECONOMIC WELFARE AS A CRITERION OF ECONOMIC DEVELOPMENT

               According to this. method, economic development is a process whereby there is, an increase in the consumption of goods and services of individuals. As Okun and , Richardson say," Economic Development is' a sustained and secular improvement in material well-being’ which will be. reflected in increase_ in goods and services", This means that according to this criterion, economic development will take place when .people are having more goods and services to consume than earlier. As a result, their' welfare will go up. Thus, this, method stresses upon qualitative aspect in addition to quantitative one.

DEMERITS OF WELFARE CRITERION

1. How Increase in Goods and Services-has been Produced ?

According to this method, development will take place or only when people are having more goods -and services than earlier. But this is not sufficient, rather we will have to consider the nature of goods produced. If the increase in goods and services is due to increase,' in the production of armaments, beverages, intoxicant, palacious houses and un-necessary luxuries -it cannot be accorded as economic development.

2.          How the Goods have been produced?                .                                                     I

If the  increase in goods- and services has been produced at the cost of exploitation of labor reduction in wages increase in air and noise. Pollution, shattering of family life and heavy migration from rural to urban areas creating a lot of problems'

relating to urbanization ___ it will not be economic development.                                       .

3. How the goods have been Distributed                                                                               I

             Due to economic development it is possible that people are having more goods and services than before but it is not necessary that the distribution of gods and services has been a fairer one. The rich segment of the society has taken way the major share of increase in the produced gods and services w3hile the poor section of the society has remained deprived of it. The rich people minority in numbers may be having palacious houses while the majority of people who are poor will be having only small huts. The rich have access to standard public schools whole offspring’s of the poor persons fail to get the necessary milk. All this will contradict economic development. Thus any criterion of economic development must entertain the distributional aspects of increased GNP or GNP per capita.

4 SOCIAL INDICATORS AS ALTERNATIVE MEASQRES TO DEVELOPMENT:

     THE SOCIAL INDICATORS APPROACH, AND THE PHYSICAL

QUALITY OF LIFE APPROACH

, Earlier we discussed the traditional measures of economic development i.e., The .GNP and GNP per capita approaches and their flaws. The main objections levied against these approaches ere:

In these measures those goods are not included' which are not marketed like subsistence prod!1ction, h9me makers work. Moreover, these approaches failed to consider the welfare and distributional considerations Therefore, the. Economists and ,policy makers engaged in finding and devising other measures which could either substitute the previous measures or could' supplement them.. Basically, such indicator  ' fall into two groups. There is a group, which wants to measure economic development in terms of 'normal' or 'optimal' pattern of interaction among social, economic, and" I , political factors. There is another group which wants to measure economic development in terms of Quality of Life.

(1) Economic Development___ Social Economic Indicators Approach.

To measure economic development with this approach a study was launched by ,

United Nations Research Institute on Social Development (UN1USD) in 1970. This study was concerned with selection of the most appropriate Indi9ators of Development and an analysis of the relationship between these indicators at different levels of development. Accordingly, a composite "Social Development Index" was constructed. Originally, 73 indicators were examined. Howe ever  only 16 core indicators (9 social and 7 economic indicators) were selected. They are 'as: (1) The life expectancy, (2) Percentage of  popu1ation in localities of 20,000 and over, (3) The precipitate use of animal ,protein per day, (4) The combined enrollment at primary and secondary level (5) The vocational enrollment ratio, (6) Average number of persons per room (7) News paper circulation per 1O00 population (8) Percentage of economically active _. Population with electricity, gas water etc. (9) Agriculture production per male agri.worker, (10) 'Percentage of adult male labor in agri. (11) Electri9ity consumption, KW precipitate, (12) Steel consumption, Kg per capital (13) Energy consumption, Kg of coal equivalent per capita, (14) Percentage GDP derived from manufacturing, '(15) , Foreign trade per capita, J-n 1960 US dollar, (16) Percentage of salaried and wage  earners’ to total economically active population. '

The above social and economic indicators were selected because there existed a big correlation between them regarding formation of a development index. And .so 'the constructed development index is considered to be more suitable than per capita income approach to measure economic development. On the basis of such "Development Index", the ranking of certain countries differed from ranking made on the basis of 'GNP per capita. It was also found that the. "Development Index" was more highly correlated with GNP per captivator developed counties than for developing counties. c The study concluded that social development occurred at a more rapid rate than economic development up to level of $ 500 per capita (at 1960's prices).