Development And Development: The Importance Of Economic Development

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According to Professor Michael Todaro, economic development is an increase in living conditions, improvement of the citizens self-esteem needs and free and a just society. It can also be referred to as the qualitative and quantitative changes in an existing economy. It involves development of human capital, increase in the literacy ratio, improvement in necessary infrastructure, betterment of health and safety services etc. Economic development is a government policy to increase the economic, social welfare and ensuring a stable political environment and economic growth is the general increase in the country’s product and services output. Thus, it makes economic growth a subset of economic development. So, what promotes development? When we…show more content…
Various kinds of institutions have been created over the time in the history to suit the needs of people to create order and reduce uncertainty in exchange. In the olden days, where humans were hunter gatherers, economies were limited to their own herd or village, they were self sufficient, and costs of transacting were low. But as the economies expanded and trading between villages started, the possibilities for conflict over exchange grew. The transaction costs also grew rapidly as the size of the market grew. The development of long distance trade, through ship voyages, caravans etc required a break in characteristics of economic structures. As the trade grew many folds, people needed someone to protect their shipments, enforce contracts in alien lands and strike…show more content…
Sachs in his article “Institutions Matter, but not for Everything” in Finance & Development June 2003 edition discusses how institutions alone cannot bring in economic development and geography too plays a role in development. He quotes Adam Smith’s “Wealth Of Nations” to explain his point. Sub-Saharan African countries and Central Asian Countries are some of the poorest countries in the world. They could not participate in the international trade because they are land locked and transport costs are high and without international trade, these countries make small markets and coupled with inefficient division of labour, continues to dwell in poverty till date. Sachs also points out the biological part of these areas apart from being isolated from international trade. He says these areas are marred with highest incidence of malaria in the world. He adds, “Good institutions certainly matter, and bad institutions can sound the death knell of development even in favourable environments.” However not all malarial region are doomed in poverty, special investments are needed to fight the disease. Landlocked regions may be burdened with high costs of transport, but with special investments in roads, communications, rail and communications, the problem can be

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