Beruflich Dokumente
Kultur Dokumente
Development
Structure:
30.1 Introduction
30.10 Summary
Objectives:
30.1 Introduction:
Dear student you know that the importance of population growth and its impact on
overall economic development. It may have positive and negative impact on an economic
development of an economy. Its all depend upon how best you utilize the growth in the
human resources in productive ways determines its influence on economic development.
Let us observe the views expressed by the different economists on this particular issue in
this chapter.
The consequences of the population growth on economic development have attracted the
attention of economists ever since Adam Smith wrote his Wealth of Nations. Adam
Smith wrote, “The annual labour of every nation is the fund which originally supplies it
with all the necessaries and conveniences of life.” It was only Malthus and Ricardo who
created an alarm about the effects of population growth in the economy. But their fears
have proved unfounded because the growth of population in Western Europe has led to
its rapid industrialization. Population growth has helped the growth of such economies
because they are wealthy, have abundant capital and scarcity of labour. In such countries,
the supply curve of labour is elastic to the industrial sector so that even a high growth rate
of population has led to a rapid increase in productivity. In fact, every increase in
population has led to a more than proportionate increase in the gross national product.
But same may not be true in the case of Less developed economies where labour is in
abundant and capital is scarce. Thus, here the debate on population and its impact on
economic development occupies prominence.
However, the consequences of population growth on the development of LDC’s are not
the same because the conditions prevailing in these countries are quite different from
those the developed economies. These economies are poor, capital-scarce and labour-
abundant. Population growth adversely affects their economic development in the
following ways.
1) Faster population growth makes the choice more scarce between higher
consumption now and the investment needed to bring higher consumption in the
future. Economic development depends upon investment. In LDC’s the Resources
available for investment are limited. Therefore, rapid population growth retards
investment needed for higher future consumption.
2) Rapid population growth tends to overuse the country’s natural resources. This is
particularly the ease were the majority of people are dependent on agriculture for
their livelihood. With rapidly rising population, agricultural holdings become
smaller and unremunerative to cultivate. There is no possibility of increasing farm
production through the use of new land. Consequently many households continue
to live in poverty. In fact rapid population growth leads to the overuse of the land
thereby jeopardizing the welfare of future generations. Even in countries were
natural resources are untapped such as Brazil and other Latin American Countries,
rapidly increasing population makes it difficult to invest in roads, public services,
drainage and other agricultural infrastructure needed to tap such resources.
The effect of population growth tends to retard the per capita income in three ways
A rapidly increasing population leads to an increased demand for food products, cloths
etc., but their supplies cannot be increased in the short run due to the lack of co operant
factors, like raw materials, skilled labour, capital etc., consequently, their costs and prices
rise which rise the cost of living of the masses. This brings down further the already low
standard of living.
30.5 Population and Agricultural Development:
A rapid growth in population disturbs the land-man ratio. Pressure of population on land
increases and it adds to disguised unemployment and reduces per capita productivity
further. As the number of landless workers increases, their wages fall causes low per
capita productivity, low savings and low investment. Thus the growth of population
retards agricultural development.
A rapidly increasing population leads to increase in the labour force in relation to capital,
land and other resources. Further complimentary factors available for worker decline, and
as a result unemployment and underemployment increase.
Rapidly growing population needs large investments in social infrastructure. But due to
scarcity of resources it is not possible to provide educational, health, Medical, transport
and housing facilities to the entire population. There is over crowding everywhere. Thus
such dense population aggravates the problem of improving the health of population.
A labour force in an economy is the ratio of working population to the total population.
Thus the labour force tends to increase with the increase in population. Since it is not
possible to increase capital for workers each worker will produce less than beore. This
will reduce productivity and incomes. Besides, rapid growth in the labour force increases
both open unemployment and underemployment in urban and rural areas.
At the outset, the consequences of a rapidly increasing population are to retard all
development effort in an UDC’s unless accompanied by high rates of capital
accumulation and technological progress. But these counteracting factors are not
available and the result is that population explosion leads to declining agriculture
productivity, low per capita income, low standards of living, mass unemployment, and
low rate of capital formation.
In view of the above there is an urgent need to develop human resources. According to
Schultz, there are five ways of developing human resources. They are:
d) Study programs for adults that are not organized by firms, including
extension programs notably in agriculture
Man power planning relates to the long-range development of semi-skilled and skilled
manpower requirement of the economy, and to plan educational priorities and
investments in human resource development so as to enlarge employment opportunities
in the future.
a) The failure to recognize that the requirements for sub professional manpower are
many times higher than for professional personal.
b) Lack of entrepreneurial abilities.
c) Because of low salaries.
d) The few persons who are qualified to enter a technical institute prefer to enter a
university due to higher status and pay
There are invisible manpower shortages due to persons with the requisite skills are not
available. This affects productivity adversely.
Frictional manpower shortages also there due to the lack of an organized employment
market.
a) The under employed include both open and disguised unemployed .both these
forms of under employment exist in rural and urban areas in the LDC’s. Some
economists estimate the number of unemployed to be as high as 50 to 80% of the
potential labour force in the LDCs.
b) The educated unemployed and under employed also reflect the surplus man power
in UDCs.
c) Besides the surplus educated and uneducated manpower already existing in urban
and rural areas, urban unemployed and under employed are on the increase with
development.
There are different strategies developed by different economists for Human Resource
Development. One of the important strategies propounded by Harbison. In his strategy
for human resource development, he suggested the following three essential components.
They are:
a) The building of appropriate incentives. It is crucial for both the accumulation and
investment of human capital. Therefore people should be encouraged to engage in
productive activities which are needed to accelerate the process of economic
development.
b) Training of employed manpower. The second point for the strategy of human
resource development is to upgrade the qualifications and improving the
performance of employed manpower in strategic occupations.
Since 1990, the UNDP has been presenting the measurement of human development in
terms of human development index in its annul human development report. The HDI is a
composite index of three social indicators:
• Life expectancy
• Adult literacy
• Years of Schooling
It also takes into account real GDP per capita. Thus, the HDI is a composite index of
achievements in three fundamental dimensions;
• Knowledge
the HDI is a simple average of life expectancy index, educational attainment, and the
adjusted real GDP per capita (PPP $) index. It is calculated by dividing the sum of these
indices by three. The maximum and minimum values per each variable which are fixed,
are reduced to a scale between ‘0’ and ‘1’, with each country at some point on the scale.
The HDI value per each country indicates the distance it has traveled towards the
maximum possible value of ‘1’ and how for it has to go to attain certain defined goals; an
average life span of 85 years, access to education for all and decent standard of living.
The HDI ranks countries in raltion to each other. A country’s HDI rank is within the
world distribution i.e., it is based on its HDI value in relation to each developed and
developing country for which the particular country has traveled from the minimum HDI
value of ‘0’ towards the maximum HDI value of ‘1’. Country’w with an HDI value below
‘0.5’ are considered to have a low level of human development, those between ‘0.5 to
0.8’ a medium level, and those above ‘0.8’ a high level.
Each indicator of the three components is placed on a scale of ‘0’ to ‘100’ where ‘0’
represents an absolutely defined worst performance and ‘100’ represents an absolutely
defined best performance. The PQLI index is calculated by averaging the three indicators
giving equal weight to each and the index is scaled from ‘0’ to ‘100’.
According to Morris, each of the three indicators measures results and not inputs such as
income. Each is sensitive to distribution effects. It means that an improvement in these
indicators signifies an increase in the proportion of people benefiting from them. But
none of the indicators depends on any particular level of development. Each indicator
lends itself to international comparison.
Morris admits that PQLI is limited measure of basic needs. Its supplements but does not
supplant GNP. It does not measure economic growth. Further, it does not explain the
changing structure of economic and social organization. It, therefore, does not measure
economic development. Similarly, it does not measure total welfare. However, it
measures the qualities of life which are essential for the poor.
30.10 Summary:
The three elements of human resource development discussed above should form part of
a country’s development program. To solve the problem of surplus manpower requires
check over rapidly increasingly population, removal of market imperfections to improve
labour mobility, building of appropriate incentives, creation of critical skills among
employed and the unemployed through formal education. Above all, “successful
development requires building up of effective government organizations, private
enterprises, agricultural extension forces, research institutions, producer and consumer
cooperatives, education systems, and host of other institutions which mobilize and direct
human energy into useful channels.”
Productivity : Every increase in factor input has led to a more than proportionate
increase in the gross national product.
Capital scarce : Some Countries are with excess supply of capital and others will have
low quantity of capital. The countries are suffering with less capital are known as capital
scarce countries.
Labour abundant: Some Countries are with excess supply of labor and others will have
low quantity of labor. The countries are suffering with less labor are known as labor
scarce economies.
Land-man ratio : it explains the quantity of land available for each human being.
Man power planning: Manpower planning is concerned with greater utilization of the
manpower resources of the country.