Development

The process of improving the quality of all human lives and capabilities by raising peoples levels of
living, self-esteem, and freedom

We then consider 10 important features that developing countries tend to have in common, on average,
in comparison with the developed world. In each case, we also discover that behind these averages are
very substantial differences in all of these dimensions among developing countries that are important to
appreciate and take into account in development policy. These areas are the following:

1. Lower levels of living and productivity

2. Lower levels of human capital

3. Higher levels of inequality and absolute poverty

4. Higher population growth rates

5. Greater social fractionalization

6. Larger rural populations but rapid rural-to-urban migration

7. Lower levels of industrialization

8. Adverse geography

9. Underdeveloped financial and other markets

10. Lingering colonial impacts such as poor institutions and often external dependence.

The Three Objectives of Development

We may conclude that development is both a physical reality and a state of mind in which society has,
through some combination of social, economic, and institutional processes, secured the means for
obtaining a better life. Whatever the specific components of this better life, development in all societies
must have at least the following three objectives:

1. To increase the availability and widen the distribution of basic life-sustaining goods such as food,
shelter, health, and protection

2. To raise levels of living, including, in addition to higher incomes, the provision of more jobs, better
education, and greater attention to cultural and human values, all of which will serve not only to
enhance material wellbeing but also to generate greater individual and national self-esteem

3. To expand the range of economic and social choices available to individuals and nations by freeing
them from servitude and dependence, not only in relation to other people and nation-states, but also to
the forces of ignorance and human misery
Human Development Index (HDI): An index measuring national socioeconomic development, based on
combining measures of education, health, and adjusted real income per capita

The position of developing countries today is in many important ways significantly different from that of
the currently developed countries when they embarked on their era of modern economic growth. We
can identify eight significant differences in initial conditions that require a special analysis of the growth
prospects and requirements of modern economic development:

1. Physical and human resource endowments

2. Per capita incomes and levels of GDP in relation to the rest of the world

3. Climate

4. Population size, distribution, and growth

5. Historical role of international migration

6. International trade benefits

7. Basic scientific and technological research and development capabilities

8. Efficacy of domestic institutions

Free trade

Trade in which goods can be imported and exported without any barriers in the forms of tariffs, quotas,
or other restrictions.

Three components of economic growth are of prime importance:

1. Capital accumulation, including all new investments in land, physical equipment, and human
resources through improvements in health, education, and job skills

2. Growth in population and hence eventual growth in the labor force

3. Technological progressnew ways of accomplishing tasks

Kuznets curve

A graph reflecting the relationship between a countrys income per capita and its inequality of income
distribution

World Bank

An organization known as an international financial institution that provides development funds to

developing countries in the form of interest-bearing loans, grants, and technical assistance.
 Low-income countries (LICs) In the World Bank classification, countries with a GNI per capita of less
than $1,025 in 2011.

Middle-income countries In the World Bank classification, countries with a GNI per capita between
$1,025 and $12,475 in 2011

High-income countries in the world bank classification, countries with a GNI per capita incomes of
$12,476 or more.

Indicator of HDI

Life expectancy at birth (years) 64.6

Mean years of schooling 7.0

Expected years of schooling 11.4

GNI per capita (PPP $) 1,684