PRESENTATION OF ECONOMICS ON CONCEPT OF ECONOMIC DEVELOPMENT

CONTENTS  Economic Growth  Economic Development  Economic Welfare  Capital Formation  Foreign Employment  Foreign Direct Investment

ECONOMIC GROWTH According to Kuznets, "Economic growth is a long term rise in capacity to supply increasingly diverse economic goods to its population, this growing capacity based on advancing technology and the institutional & ideological adjustments that it demands."

Based on the definition of Kuznet, all three principle components of economics are of great importance: The sustained rise in national output is a manifestation of economic growth and the ability to provide a wide range of goods is a sign of economic maturity. Advancing technology provides the basis or preconditions for continuous economic growth-a necessary but not sufficient condition. To realize the potential for growth inherent in new technological, institutional, attitudinal and ideological adjustments must be made.

Kuznet identified six important characteristics of modern economic growth: High rates of growth per capita output and population. High rates of increase in total factor productivity. High rates of structural transformation of the economy. High rates of social and ideological transformation. The propensity of economically developed countries to reach out the rest of the world for markets and raw materials. The limited spread of this economic growth to only one-third of the world's population.

Determinants of economic growth: 1. Natural resources 2. Population growth: Human Resources 3. Capital formation a. Generation of savings i. Ability to save ii. Willingness to save iii. Facilities to save b. Mobilization of savings c. Investment

Economic issues of Nepal:

Economic Growth in Nepal: The World Bank has projected Nepal’s economic growth to be at four per cent. The GDP in current prices for Nepal in year 2010 is $15.10 billion, according to World Economic Outlook 2011 that has ranked Nepal at 108th position in world rankings according to GDP for “Nepal is more than the average,” it said, adding that a year ago in 2009, the GDP (at current prices) was $12.89 billion. In the year 2011, the GDP (at current prices) will be $15.17 billion, which will be 0.41 per cent more than the 2010 figure. The Asian Development Bank (ADB) had, last week, projected 3.8 per cent growth for The ADB had projected inflation at 10 per cent but the World Economic Outlook 2011 has projected the price-hike to be at 9.9 per cent. “The consumer price is estimated at 9.9 per cent in 2011 from 2010’s 9.3 per cent,” according to the World Bank report. “It is expected to moderate to eight per cent in 2012.”

ECONOMIC WELFARE It can be expressed in terms of purchasing power of the money. Economic welfare is promoted when the purchasing power of money increases. Main determinants are National Income, Non-market transaction, Distribution of income, Composition of output & Quality of life. AC Pigou defines economic welfare as," that part of social welfare which can be directly or indirectly measured in money.”

 It mean process of transforming of low income countries into high income countries into high income countries  It was redefined in terms of reduction, inequality and unemployment ECONOMIC DEVELOPMENT

 Life- Sustenance: The Ability to provide basic Needs  Self- Esteem: To be a person  Freedom from Servitude: To be able to choose Three Core Values Of Development

 To increase the availability and wide the distribution of basic life sustaining goods  To raise levels of living  To expand the range of economic and social choices available to individuals Objectives of Development

 Its process of adding stock of capital in an economy over years  Its also known as capital accumulation  Involves certain economic costs as well as advantages  Consists of more goods the society will be able to produce in future years by investing resources Capital Formation

1) Generation of savings I. Ability to save II. Willingness to save III. Facilities to save 2) Mobilization of savings 3) Investment Process of Capital Formation

Significance Of Capital Formation in Economic Growth  Formation of sound infrastructures  Use of roundabout methods of production  Maximum utilization of natural resources  Proper use of human capital formation  Improvement in technology  High rate of economic growth  Agricultural and industrial development  Increase in national income

FOREIGN EMPLOYMENT  Labor Migration Relatively permanent moving away of people Abandon one social setting to adopt another Labor migration is a process & outcome of cross border recruitment and placement Based on informed choice with promised terms & conditions of employment Indicators of safe migration include proper orientation on dynamics, effective service delivery, respectable employment conditions, worker friendly policy and law, etc.

History of International Labor Migration in Nepalese Context Started about 200 years ago Mostly migrated to join international armies as in ‘Lahore’ in 19 th century and British Army in 1815/1816 and called “Gurkhas” Government is trying promote international labor migration Conducting bilateral talks with countries to increase number of posts for Nepalese Nepalese are recruited because they are cheap and are in constant danger in their job mentioned as 3D’s( Dangerous, Difficult & Dirty)

Role of Foreign Remittance Largest source of external finance for developing countries In some cases, remittance are larger than FDI Aides in boosting socio-economic activity Sustains livelihood and helps in poverty reduction strategy Creates employ mechanisms to send money back home Most important economic support because of prevailing poverty & inequality Counted as a major source of national income in GDP

 It plays an important role in development of Nepalese economy  It takes place in form of equity share capital  They control and participate in the management of that enterprise  They earn income in form of dividend Foreign Direct Investment

 Increase in resources  Risk- taking  Know-how  High standards  Marketing facilities Significance Of Foreign Direct Investment

Arguments against Foreign Direct Investment  Limited areas  Increased dependence  Remittance of large amounts  Obsolete machinery and technology  Political interface

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