Economic Growth: A country is said to achieve economic growth when there is an increase in the volume of National output (National Income) arising from an expansion in production. When there is economic growth, it shows in the form of an increase in income level, an expansion in the labour force, an increase in the total capital stock of the country and a higher volume of trade and consumption.
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While Economic development means economic growth coupled with the improvement in the living standard of the people of the country. This arises from equitable distribution of the National income. Economic development reveals all aspects of economic activities and emphasizes more on distribution of facilities between various areas.
CHARACTERISTICS OF ECONOMIC DEVELOPMENT
- Improvement in the general welfare of the people.
- Equitable distribution of the National income
- Reduction in the level of unemployment.
- Increase in real income of the citizen.
- Increase in the total capital stock.
In a nutshell, while economic growth emphasizes the increase in the volume of National output, Economic development stresses growth coupled with improvement in the general welfare, of the people arising from equitable distribution of the National Income.
A country is said to be underdeveloped when she lacks the human and material resources needed to improve the welfare of her citizens.
WHY COUNTRIES ARE CONSIDERED UNDER DEVELOPED OR DEVELOPING
Most West African countries and part of Asia are considered to be underdeveloped or developing due to the following features:
- Overdependence on primary source of production e.g. Agriculture
- High dependency on foreign countries for survival.
- Poor living standard – poor housing, hunger.
- Poor medical facilities.
- Poor infrastructural base.
- High level of illiteracy.
- Increase in unemployment rate.
- Inequality in the distribution of income.
- Political and economic instability.
- Low savings and investment arising from low per capital income.
CAUSES OF UNDERDEVELOPMENT
- Low level of saving arising from low per capital income
- As stated above, where savings is low, investment as well will be low resulting to underdevelopment.
- Political instability which transient to frequent change in economic policies.
- Poor planning and implementation.
- Corruption and embezzlement of fund by public officials.
- High rate of population growth.
- Over-reliance on importation.
- Poor capacity building.
- Poor infrastructural base
- Low level of Technology.
SOLUTION TO UNDERDEVELOPMENT
For a country to eradicate poverty and be considered developed. The following steps should be taken.
- Capital accumulation i.e. encourage savings towards investment.
- Capital formation – Investment should be made on social infrastructure and businesses.
- Engage in Foreign Trade – In doing this the country must bargain for a favourable term of Trade. Industrialization is important, this will ensure that the country export more than she imports.
- Borrowing from Financial Institution both local and foreign e.g. IMF, World Bank. But effort must be geared towards enduring that loan obtained is used for capital project that will add value to the economy.
- Capacity Building – Training of man power is very essential. This could be achieved through establishment of vocational centres, colleges, universities to enrich the technical know-how of the citizens.
- Adoption of socialist ideology since capitalist ideology is capable of widening the gap between the rich and the poor.
STRATEGIES FOR ECONOMIC DEVELOPMENT
- Diversification of the economy. That is to say Nigeria should develop other sectors apart from oil.
- Provision of social infrastructure e.g. roads, railways, school, hospitals etc.
- Ensuring political stability.
- Export promotion
- Manpower development
- Capital accumulation
- Development of market
- Borrowing from Foreign Lenders but with favourable interest rate.
- What is economic development? State its characteristics.
- How is economic growth different from economic development?
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