Why Economic Development?

History of Economic Development:

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 revolution.

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.

The 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 popularity.

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".

Such 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 explained as:

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 backward economically.