Key Foundations of Economic Development - Essay Example

Development’ Means Different Things to Different People Introduction The definition of development can be quite vague and cause confusions. It is crucial to understand what development is in order to know how it can be made possible and measured. A proper understanding of development will help in developing good economic policies that will lead to even more development. Development is a continuous thing rather than one off thing and this indicates that it is necessary crucial that continuous planning be made in order to increase the development and to create proper development policies. Economic development may refer to at least two things with regard to the economy of a country. The first one is the physical expansion of economic growth that leads to a bigger economy. This is usually measured in metrics such as GDP which is the measure of the amount of outputs in the nations. One example to show this is the western economies compared to the developing nations. In a developed economy such as the US or the UK, the delivery of services is usually expensive and this means that one has to pay higher prices for goods and services as compared to the developing nations. For instance, a loaf of bread can cost more in United States of America in comparison to how much it costs in a neighboring economy such as Mexico. This difference is caused by the level of economic growth. This also implies that economic growth does not always lead to better standards of living. For instance, a person earning ten dollars per hour in Mexico is likely to lead a better life than a person earning the same amount to money in Mexico. As already discussed, economic development can also be defined in terms of the ration of the cost of delivering services and goods as in comparison to the cost of doing the same. Some economies have managed to achieve this although it is more difficult to achieve. A good example can be a country like Singapore. In the last 40 years, Singapore has achieved a kind of development in which the delivery of services has increased while the cost of delivering these services has reduced. This has led to a better ways of living and at the same time the cost of giving these services has declined. This mean that an individual in Singapore can access better services such as healthcare, food, and any other thing that has an economic value on it at a considerably low price clamored to an America, yet the quality if these economic values are equal or better than those in the US of America. According to (Livneh, 2013) measuring economic development can be hard and this has brought some disagreement amount professionals in the way nations are classified in terms of heir development level. There are other kinds of economic development that must be considered. For instance Husain (1967 p. 70) defines economic development as being affected by the various activities of a number of individuals who behave in an entrepreneurial way. This definition seems to recognize the fact that development is determined by the amount of economic activities in an economy. According to Jaffe (1998, p37) human capital is defined as the individuals productive skills, talents and knowledge and these are seen to contribute to economic development. This definition of development seems to agree with Husain’s definition of development because it recognizes the level of economic activities as the metric for measuring the economic development. This is because the more there are businesses (entrepreneurial) activities, the more the more the human capital will be utilized in the economy. As Weisbrod (2000, p. 36) says, there is a wide disparity of the ways that should be utilized to measure economic development especially when this is done on a regularly. This means that every economic system should have its own way of measuring economic development because each is affected by many issues that will determine the way the growth is achieved. According to World Bank (2011) economic development offers local authorities, the commercial and NGOs , and local societies a way to work in unison to improve the economic system. In this case, development can be defined as the amount of opportunities that an economy offers to the people within that economy, to be economically productive. Economic productivity therefore becomes a fundamental measure of economic growth and this means that then the more people are productive in the economy the more the economy is developed. Development can again be defined as the level of interactions between the various economic agents within an economy (Lorraine, 2012, p15). In this case, in national economic accounting, being able to identify how the transactions between different economic agents is crucial in identifying economic growth (Harvey, 1952, p.141). According to this definition of development, the more the different economic agents such as agriculture, infrastructure education etc interacts, the more development in that economy. Multicollinearity is one if the factors that make it harder for the existence of a standard model of measuring economic development of defining development (Uphoff, & Warren, p. 1972). Multicollinearity refers to the fact that there are multiple independent factors that affect how an economic develops or grows. As Pryor (2005) says, the level of economic development in an economic system also affects how economic development is defined and how it is measured within that economic system. Development can also be defined as the level at which human welfare is upheld within a society (Leeuwen, 2007, 45). Other more general definition of development exists in economics literature. Economic development that does not increase the welfare of the individual id therefore not considered as economic development in that it does not lead to the better living of people in that economy. Economic development can be expressed in two principal ways: The expansion of the economic system regards the growth of the business activity in an economy, and the creation of human welfare (Allen & Unwin, 1962, 52). This includes essential services such as healthcare, housing and education. The more an economic system is able to deliver these services, the more it is considered to be developed. On the other hand, development can be defined in terms of the level of infrastructure that that nation has. These include things sic as roads, power distribution and other forms of real structures that enable the smooth running of the economy. This definition of development however fails to address the micro factors that affect the individual and assumes that the existence of these infrastructures will lead to improved living standard for every citizen. This postulation is however wrong and misleading because it is possible to have the infrastructure in a country where the people cannot afford to benefit from the infrastructure. For instance, if a country invests too much in significant infrastructure and fails to create employment, the people may be so poor that they cannot be able to benefit from the infrastructure. An example of this is China, it is one the countries in the world where technology and infrastructure is extremely advanced, with large hydroelectric dams being built and highways being developed. However, despite these developments, China still has some of the most economically disadvantaged people who live remarkably low standard lives. According to Arndt, (1989 p.4), the push for equity in economic contribution and growth lacked importance in the developing nations where the majority of the rich political elites continues to be richer while the poor get poorer. In this regard, it becomes extremely hard to use the existence of infrastructure as a definition of development. Assessing the per pa capita income and how welfare this income is able to buy an individual or a family can give better definitions of development because it shows how each individual is being affected by the development. Under the platform politics, development is viewed as a product of mobilisation of institutions that are controlled by politics. In fact, political scientists argue that in order to have an economic development, there must be the level of democracy, which is highly interrelated to politics (Huntington, 1965, 9 387). It is through political participation that most of development agendas are articulated. This has to do with the integrity and accountability of persons heading various institutions. In most cases, through manifestos presented by various political leaders, the populace tends to side with politicians with better manifestos. Basically, the most considered manifestos are evaluated in terms the social and economic developments presented. In addition, development is perceived to be an ingredient of political stability of the given region. For example, a country with political stability tends to encourage development partners unlike in countries with higher levels of instability. Conclusions There are a number of different and contrasting definitions of development which have been brought forward. These differences in the definitions of development arise from the fact that there are various factors that can be viewed as development. For instance, the level of infrastructure development can be used to define development. All these opposing definitions of development can be useful depending on what one is looking for. Simultaneously, it is indispensable to consider the level of infrastructure in order to put in light that these populace access the utilities they need in a proper way. Reference List: Allen & Unwin. (1962). Factors in Economic Development. Chicago: University of Chicago. Arndt, H. W. (1989). Economic Development: The History of an Idea. Chicago: University of Chicago Press. Bank, W. (2011). What is Local Economic Development (LED)? Retrieved February 26, 2013, from Local Economic Development: http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTURBANDEVELOPMENT/EXTLED/0,,contentMDK:20185186~menuPK:399161~pagePK:148956~piPK:216618~theSitePK:341139,00.html Harvey, J. &. (1952). Economics: Principles and Applications. Goodwill Trading Co. Husain, H. (1967). Economic Factors in Economic Growth. Michigan: University of Michigan. Huntington, S (1965). Political development and political decay. World politics, 17, 3: 368-430. Jaffe, D. (1998). Levels of Socio Economic Development Theory. Westport, CN: Greenwood Publishing Group. Leeuwen, B. v. (2007). Human Capital and Economic Growth in India, Indonesia, and Japan: A quantitative analysis, 1890-2000. London: Box Press shop. Livneh, D. (2013, January 13). Defining Developing. Retrieved February 27, 2013, from Understanding the intricacies of making progress in a developing nation: http://www.ssireview.org/blog/entry/defining_developing Lorraine, S. (2012). The difficulties of defining development: A case study. International Journal for Academic Development, 15, 1. Uphoff, T. &. (1972). The Political Economy of Development: Theoretical and Empirical Contributions. Berkerly, CL: University of California Press. Pryor, F. (2005). Economic Systems of Foraging, Agricultural, and Industrial Societies. Cambridge: Cambridge University Press. Weisbrod, G. (2000). Current Practices for Assessing Economic Development Impacts from Transportation Investments: A Synthesis of Highway Practice. Transportation Research Board. Read More