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Chapter: 12th Economics : Economics of Development and Planning

Meaning of Development and Underdevelopment

The concept "development" refers to the structural changes towards betterment.

Meaning of Development and Underdevelopment

Introduction

The concept "development" refers to the structural changes towards betterment. Until the World War II, interest was rarely shown on the problems of the present day third World Countries. After the Second World War, economists started devoting their attention towards analyzing the problems of underdeveloped countries and formulating theories and models of development and growth. The Under Developed Countries (UDCs) were once the colonies of England and other European countries. After becoming free and independent, there was an awakening to march towards economic development.

Approaches to Economic Development

There are two main approaches to the concept of development viz i) the traditional approach and ii) the new welfare oriented approach.

1. Traditional   Approach:  The traditional approach defines development strictly in economic terms. The increase in GNP is accompanied by decline in share of agriculture in output and employment while those of manufacturing and service sectors increase. It emphasizes the importance of industrialization. It was assumed that growth in GNP per capita would trickle down to people at the bottom.

2. New Welfare oriented Approach:

During 1970s, economic development was redefined in terms of reduction of poverty, ‘inequality’ and unemployment within the context of a growing economy. In this phase, ‘Redistribution with Growth’ became the popular slogan.

To quote Michael P. Todaro, “Development must, therefore, be conceived as a multidimensional process involving major changes in social structures, popular attitudes and national institutions as well as the acceleration of growth, the reduction of inequality and the eradication of absolute poverty”.

Underdevelopment

The UDCs are characterized by predominance of primary sector i.e. agriculture, low per capita income, widespread poverty, wide inequality in distribution of income and wealth, over population, low rate of capital formation, high rate of unemployment, technological backwardness, dualism etc.


Meaning of Underdevelopment

The term underdevelopment refers to that state of an economy where levels of living of masses are extremely low due to very low levels of Percapita income, resulting from low levels of productivity and high growth rate of population.


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