History of Economic
It is commonly said that the concept of
economic development goes back to the emergence of "Industrial
Revolution" in Europe in 18th century. Because of such industrial revolution the
use of machinery, new ideas and new technology increased in UK, France and
Germany which initiated the process of industrialization in these countries.
Afterwards, this process spread over the to Japan, Russia and US. But whole of
the world could not be benefited by Industrial Revolution. The countries from
Asia, Africa and Latin America failed to avail the fruits of industrial
Accordingly, they remained poor and
backward. In such state of affairs the world divided into two distinctive parts.
On the one side there were those countries which experienced greater rise in
their incomes, outputs and employments. On the other side there were the
countries which faced falling levels of outputs, rising level of unemployment,
the diseases, the poverty and ever increasing illiteracy. In this way, an international division came into being.
rich countries and the poor countries. In modern terminology, the world was divided into two
opposite poles which are given the name of 'North' (the rich countries of the
world) and the 'South' (the poor countries of the world).
Till a long time the people of the poor countries remained ignorant of their
poverty. They went on accepting their poverty, illiteracy, starvation and
diseases as some thing natural. After the World War II when so many countries
got rid of 'Imperialism' a desire emerged amongst these countries to remove
their poverty, reduce unemployment and improve their standard of living. In
other words after World War II there rose the desire for economic improvement in
the backward nations of the world. It is the "International Media" which
played an important role in this surge of change. The people of the poor
countries became aware of with the life standards enjoyed by their rich
counterparts. Moreover, the foreigners living in the 'Colonies' created the
desire amongst the domestic residents to copy them in connection with their life-standard and consumption
patterns, With this back ground the concept of economic development got the
Accordingly, the poor countries of the world are struggling for the
removal of poverty, illiteracy, starvation, unemployment, malnutrition,
diseases, economic stagnation and environmental pollution. But the poor
countries can not devote such a long time what it was devoted by the rich
countries when they were poor countries.
Moreover, the level of resources,
technologies and the social and institutional structure of these poor countries
does not allow them to attain economic development as soon as could be possible.
But even in the presence of these obstacles and constraints the poor countries
are highly over-ambitious to attain economic development, particularly when we
see that the inequalities at international level an increasing day by day. As if
we drew a line of demarcation between the rich and the poor nations by $500 per
capita income, i.e., these countries having per capita income above $500 are the
rich countries while the countries with per capita income lower than $500 and
the poor countries. In such situation, it is found out that 20% of the
world population which consists of the rich people is having control over 70%
of world's income. Whereas, 80% of world's population which resides in the
poor countries just occupies 30% of world's income.
Not only the rich
countries command greater control over world's income, but the 'Incomes Gap'
between the rich and the poor countries goes on to increase. The countries like, Pakistan,
India and the Bangladesh etc., have the per capita incomes in between $ 300 to $900 per annum, whereas, the countries like UK, France and US has the per capita
incomes in between $15000 to $40000 per annum. Such heavy inequality in
between income distribution at world level represents "Development Gap".
development gap rises no only because of difference in growth rates of incomes,
but the basic difference in between incomes is also responsible for it. It is
We suppose that there are countries
like A and B. The country A is
a rich country having the per capita income of $1000, while country B is a poor
country having the per capita income of $100. If the per capita income of these
countries increases at the rate of 2% (Which is not possible) the per capita
incomer of country A will move to $1020 while that of B will move to $102. As
a result, the basic gap which was of $900 has gone up $918. This shows that if
the poor country wishes to remove this gap there should be a 20% increase in
its per capita income. But the poor countries fail to divert their resources to
capital formation. Moreover, in the backward countries, there is heavy population
pressure, and population increases at an alarming rate. The per capita income
growth rate is hardly 3% in UDCs. Accordingly, the poor countries remained