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Economic Development Objectives - Essay Example

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. Because of these changes in the production process, presently developed economies are characterized by high rates of growth factor productivity and major changes in structural transformation. …
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Economic Development Objectives
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Before Simon Kuznets, most economic theories of development only factored in economic costs and used assumptions such as technology and preferences of consumers being constant. With these assumptions, the framework of such economic theories became short-term. According to Kuznets, Modern Economic Growth is characterized by extensive use of new technology and science in the production process. Because of these changes in the production process, presently developed economies are characterized by high rates of growth factor productivity and major changes in structural transformation.
Structural transformations
Structural transformations include “diversion of economic production away from agriculture, increase in the scale of productive units, shifts in organization and in the status of labor, and shifts in the structure of consumption” (Lundberg 445). Advanced technology increases the potential of an economy recording high economic growth rates. This therefore means that technological improvements are necessary conditions and not sufficient conditions since economic development is much wider than just economic growth (Kuznets, 419). There is therefore need to factor in the structural changes associated with improved technology since the net change might be negative or zero after including the costs of structural changes to quantifying economic development.
Structural shifts and developing countries
As much as everyone in developing countries wants economic developments, they should be aware of Kuznets and that with structural shifts long-term end results could be detrimental to the welfare of their less developed economies. Anticipated high rates of productivity of labor cannot occur without structural changes. These changes include “shares of output and inputs in economic activity with implicit changes in the status of employment, the conditions of work and life, the forms of enterprise, and the structure of foreign trade and other interactions with the rest of the world” (Lundberg 451). In economies of developing countries, the changes of proportion of worker in sectors are as a result of changes in sector productivity, changes in demand patterns as a result of cost efficient technologies and emergence of new products.
Less developed economies should expect a high mobility and migration of labor in response to pursues economic development (Kuznets, 412). This is because there will be need to develop human capital sufficient to handle the improved technology and sustain the changes in demand. Young people will therefore shift from rural areas to urban areas in search or education or training that the newly advance economy will demand. This will result to the young people seeking white color jobs that are non-agricultural leading to decline in productivity in agriculture and development of other sectors such as the manufacturing or services sectors. This is likely to affect developing countries adversely.
Economic Development and Agriculture
Developing countries majorly rely on agriculture. It is mostly the earner of foreign exchange and accounts for the highest proportion of their GDP (Lundberg 460). High population in developing countries need agriculture since it is the source of food and a large part of income. With pursuit of economic development, developing countries should expect rural-urban migration. Labor engaged in agricultural production in rural areas will move to urban areas to seek employment is more productive sectors or pursuit education relevant to the new human capital demands in the economy. This is likely reduce agricultural productivity with is the main pillar of economies of LDC’s. In turn, the levels of food production for domestic consumption will reduce leading to high food prices that are not affordable to many.
As seen above, the end result of economic development objectives may be food insecurity that defeats the initial effort towards development. Leaders in developing countries should carefully seek economic development goals. They should set up good measurements of economic growth and development which account not only economic costs but also costs associated with long-term structural changes. They should apply study economic development approaches especially those of Kuznets which highly applies to the nature of their economies.
Works Cited
Kuznets, Simon. ‘Driving Forces of Economic Growth: What can We Learn From?
History?’ Weltwirtschaftliches Archiv, 116, 409-31. 1980.
Lundberg, Erik. ‘Simon Kuznets’ Contribution to Economics’, Swedish Journal of
Economics. 73(4), 444-61. 1971. Read More
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