DETERMINANTS OF ECONOMIC DEVELOPMENT

““Economic development is defined as improvement in material well- being which we may consider to be reflected in an increasing flow of goods and services”. ““Determinants of Economic development are based upon the size of production capacity, organisation and character of an economy”.

Economic Determinants Non- Economic Determinants

 Labour or human resources: If human resources are properly used, it will accelerate the process of development. If not, these may hamper the very process of development.  Size of the Market: Large size of the market would stimulate production, increase employment and raise the National per capita income.

 Capital Formation: “The principle aim of Economic development is to utilize part of the world resources on the production of Capital goods, so that greater production of consumer goods is possible in the Future”.  Natural resources: Natural resources determine the limit of Economic development of a Nation.

 Structural change: It refers to change in the occupational structure of the economy. Economy of the country is generally divided into three basic sectors: Primary (such as agricultural, animal husbandry, forestry etc.), Secondary (such as Industrial production, constructions and the like) and Tertiary (such as trade, banking and commerce.  Financial stability: It implies the existence of an efficient and organised banking system in the country. There should be an organised money market to facilitate easy availability of capital.

TThey are non-quantifiable IIn general they are not amenable to traditional tools of Economic analysis TThey are either not factored in Economic theories and models or assumed as given for e.g.: Political, Social, Religious, Cultural and Institutional aspects.

EEconomic Development is not determined by any single factor EEconomics Development depends on Economic, Social, Political and Religious factors.