GMJT2023

THEORIES AND CONCEPTS

OF DEVELOPMENT
MANAGEMENT
CHAPTER 1
INTRODUCTION TO ECONOMIC
DEVELOPMENT
What is Development???
 What? why? When? Who? How?
 Development Project and Program
 Development agencies
 Effectiveness?
 Theoretical and Real World
 Development issues
 Strengths and weaknesses?
 Opportunities and challenges?
Introduction
 The study appears in the field of
economic development after the Second
World War.

 Independence - awareness of
development issues in developing
countries.

 Until now - the issue of development in

developing countries.
 GROWTH AND ECONOMIC DEVELOPMENT

ECONOMIC GROWTH
 Refers to an increase in the output of goods and
services in the long run.
 Growth in total output: extensive growth
 Growth in output per capita: intensive growth
 Measured by the Gross Domestic Product (GDP).
 Based on per capita income.
 Rapid economic growth may reduce the
symptoms of poverty through job creation,
increasing labor productivity and so on.
 Economic Development

 Early stage - development of the national economy

is defined as the ability to achieve / set GNP growth
of 5 to 7 percent a year.
 1950-60 - declared the first decade of development
by the UN -Most countries reached that stage.
 Economic growth> ‘Tickling Down Effect'
 Apply 'growth without development'.
 Seers (1969) include three important elements in
the development of the concept of poverty,
unemployment and inequality.
 Economic development encompasses a wider scope.
DIFFERENT CONCEPTS
 Economic growth can be measured (quantitative) - income per
capita.

 Economic development of the character (qualitative).

 Economic growth and development can occur without economic

development will not happen without economic growth.

 In summary the economic development of the wider implications.

 TERMS OF ECONOMIC DEVELOPMENT

MICHAEL P. TODARO (1977)

 Development - 'a multi-dimensional process

which involves the formation and
readjustment of the economic and social
system'.
 BENJAMIN HIGGINS (1968)

 ‘Economic development is not only

focused on increasing the level of per
capita income alone but also involves the
development of human resources, the
efficiency of the population in providing
the needed items, changes in attitudes
and social, followed by improvement of
living standards and welfare.’
 TERMINOLOGY OF DEVELOPED AND
DEVELOPING COUNTRIES

A. Rich and poor countries

 Advanced economy' & ‘Backward economy'.
 Modern economy' and 'traditional economy'.

The level of development;

1. Developed countries - also known as industrial

countries.
2. Country retreat - the least developed countries.
Classification of Indicators of countries
in the world
1. Gross National Income (GNI) :
• Income group: Economies are divided
according to 2013 GNI per capita, calculated
using the World Bank Atlas method. The
groups are:
• low income, $875 or less;
• lower middle income, $876 - $3,465;
• upper middle income, $3,466 - $10,725;
• high income, $10,726 or more.
 Classification of Indicators of countries
in the world
2. Political ideology (and history)
 The first world countries: state capitalism
 National second world: communism and socialism
(Eastern Europe) -have been lost, the collapse of the
communist bloc
 Third world countries: the occupation, neutrality

3. Based on the geographical position (80s)

 Bruntland Commission divides into two:
1. Northern countries: industrial countries: Europe &
North America, Australia & New Zealand
2. South Country: Third world countries in Asia, Africa
and South America)
B. DISTRIBUTION OF THE WORLD

i. First World Countries

 Industrial countries in Western Europe,

North America and the Pacific.
 Developed countries.
 Industrialized countries.
 Dominate the world economy.
 enjoys a relatively high standard of living
 Most countries with a high per capita
gross domestic product (GDP)
ii. Second World Countries

 The former Soviet Union, Eastern Europe-based

economy.
 National socialist economy, the government
determines the national production.
 Cold War.
 The developed and industrialized countries.
 iii. Third World Countries

 2/3 of the world population - covering Latin

America and the Caribbean, Africa, Central
Asia and Asia (except Japan).
 UNCTAD (United Nations Conference on
Trade and Development) - represented by
127 countries Afro-Asian and Latin American
(ND3)
 Agricultural-based country - the underlying
commodity.
 Backward country, a poor country and the
southern block.
Blue: Country First
Red: The Third World Countries
Green: The Third World Countries
DISTRIBUTION OF THIRD WORLD COUNTRIES

1. Newly Industrializing Countries (NICs).

◦ "East Asian Tigers“: Hong Kong, South Korea, Singapore and Taiwan
rose to global prominence with rapid industrial growth since the
1960s
◦ Current examples are Mexico, Turkey, Thailand, Malaysia and South
Africa.
◦ China and India are special cases: their tremendous population
means that per capita income is likely to remain low even after these
countries achieve a certain kind of economic sophistication.

2. Poor countries
3. Developing country
4. Oil-exporting countries - Organization of
Petroleum Exporting Countries (OPEC).
C. Geographical distribution

North
 Represented by developed countries
(countries of the First World and Second
World countries).
 Industrialized countries.

South
 Represented by Third World countries -
developing countries, underdeveloped
countries and poor countries.
 Dependency relationship exists in the
economy.
The characteristics of developing countries

a. Low living standards

 National income per capita.
• The relative rate of growth of
national income (per capita).
 Distribution of national income.
 Poverty.
 Health.
 Education.
 Cont’

b. Low productivity.
c. High population growth.
d. Unemployment and underemployment
high.
e. Reliance on the export of agricultural and
basic goods.
f. Domination, dependency and vulnerable in
international trade.
g. OTHER CHARACTERISTICS

 Political system.
 Lack of capital and technology.
 Low savings rate.
 Economic dualism.
 BARRIERS TO INTERNAL AND EXTERNAL DEVELOPMENT

a. The number of inhabitants.

b. Natural resource issues.
c. Lack of capital.
d. Low productivity.
e. Political institutions.
f. Lack of modern technology.
g. Poor quality education.
h. Poor health.