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- what are the MAJOR MOTIVES AND OBJECTIVES of economic development?
Posted by : Ahsan Khan Thursday, 22 December 2011
The process in which simple, low-income national economies are transformed into modern industrial economies. The term Economic Development is sometimes used as a synonym for economic growth; generally it is employed to describe a change in a country's economy involving qualitative as well as quantitative improvements.
Origin and History:
Economic development first became a major concern after World War II. Developing countries to compare their economies with the developed countries, which were understood to be Canada, the United States, European countries, Japan, South Africa, Australia, and New Zealand.
“It refers to the process whereby the total supply of goods and services of the society increases leading towards improved living standard.”
According to Micheal P. Todaro:
“Development must be conceived (considered) for as a multi-dimensional process involving major change in social structures, popular attitudes and national institutions as well as the acceleration of eco-growth, the eradication (end) of poverty and reduction of inequality of wealth.”
According to Kindle Berger:
“Economic development relies both on more output and changes in technical and institutional arrangements by which it is produced and distributed.”
MAJOR MOTIVES AND OBJECTIVES OF ECONOMIC DEVELOPMENT:
Following are the major objectives of economic development in Pakistan. These may be divided into four parts:
- Economic Objectives
B. Demographic Objectives
- Cultural & Political Objectives
- Technological & Miscellaneous Objectives
Following are the economic objectives of economic development:
1) To Reduce Poverty
The most of the developing countries including Pakistan are facing the problem of general as well as absolute poverty. Poverty is not only itself bad but it produces a lot of economic and social crimes. Reduction in poverty is one of the main goals of economic development. 21.0 % population was living below poverty line in Pakistan during 2009-10.
2) To Reduce the Burden of Internal and External Debts
Economic development helps a nation to adopt the self-reliance policy. Poor nations like Pakistan are loans and grants receiving nations. The most of the developing countries are receiving domestic and foreign loans. Another aim of economic development is to reduce the burden of debts. Burden of foreign debt on Pakistan is $ 53.9 billion.
3) To Increase the Per Capita Income
Per capita income of developing countries is very low. Economic development leads to increase in per capita income of poor countries. Increase in PCI leads to more saving and more investment. High per capita income is a symbol of progress and prosperity. Now per capita income of Pakistan is $ 1095.
4) Development of Agricultural Sector
Backward agricultural sector is the largest sector of the economy of Pakistan. Here due to use of traditional means of production productive quality and quantity is very low. Economic development is required to develop the backward agricultural sector that is essential for a country. Contribution of agricultural sector to GDP is 21.5 %.
5) Development of Industrial Sector
Industrial sector is the second largest sector of our economy. Since partition, development of industrial sector is not satisfactory. Economic development also helps to develop the industrial sector. Without industrial development progress and prosperity is impossible. Share of industrial sector to GDP is 25.2 %.
6) To Reduce Unemployment
One more objective of economic development is to reduce the unemployment. Unemployed population is a burden on our economy. Economic development creates new employment opportunities. Rapidly raising population creates a problem of unemployment that can be solved through economic development. Rate of unemployment in Pakistan is 5.5%.
7) To Enhance the Productivity Level
Productivity level in agricultural and industrial sector is very low in Pakistan. Another objective of economic development is to increase the productivity level with the help of using modern technologies.
8) To Correct the Balance of Payment
Since 1947, usually Pakistan has been facing deficit in its balance of payment. It is due to more imports and less exports. To correct the balance of payment economic development is necessary. Economic development will increase the exports and decrease the imports of a country. During July - March 2009-10 deficits in balance of payment was $10.945 billion.
9) To Remove the Deficiency of Capital
Pakistan is also facing the problem of shortage of capital. Economic development will increase the income of people and overall nation. It will lead to more saving and more investment. So, economic development is helpful to remove the deficiency of capital. Economic development will increase the rate of capital formation. Total investment and domestic savings are 16.6 % and 9.9 % respectively in Pakistan.
10) To Use Resources Optimally
Economic development enables a nation to utilize the existing resources optimally. Developing counties have a lot of natural resources that remains un-utilized, under-utilized or mis-utilized due to poor state of technology.
11) To Remove Market Imperfection
Market forces in developing countries are not acting freely. Monopolists have a complete control over the economy. They create artificial shortage of goods to charge high prices. Problems of market imperfection can be removed through economic development.
12) To Remove the Vicious Circle of Poverty
According to Ragnar Nurkse, vicious circle of poverty is the biggest reason of backwardness of developing countries. Economic developments will lead to remove the vicious circle of poverty. Due to vicious circle of poverty national income, national savings and national investments all are very low. 21.0 % population is living below poverty line in Pakistan.
13) To Control Inflation
High rate of inflation in developing counties is also creating a lot of problems. Economic development is required to control the increasing inflation. Now rate of inflation (CPI) is 13.3 % against the 22.3 % in last year. Food inflation is 14.5 % and non-food inflation is 12.2 %.
Following are the demographic objectives of economic development:
14) To Improve the Living Standard
Population is rapidly increasing in developing countries. On the other hand already existing population has non-availability of basic needs. Living standard of population is very low in Pakistan. Economic development also contains the objective to improve the living standard of population. The living standard of 21 % population is very low in Pakistan.
15) To Remove Pollution
Due to industrialization in poor countries, the air pollution and water pollution is common. Economic development will lead to installation of treatment plants which will reduce pollution. Pollution is creating a lot of diseases and causing the efficiency of labour.
16) To Achieve Better Health
Developing countries have less health facilities. Economic development causes, the production of more and better instrument for treatment. Reduction in death rate and improvement in life expectancy is possible due to economic development. Expenditure on health sector is 0.5 % of GDP.
17) To Check Brain Drain
Brain drain is the out flow of best brain. It takes place due to misuse of their talents and abilities. Economic development has an aim to engage these people within the country, which is better for a nation.
18) To Develop Infrastructure
Better infrastructure like education system, better health facilities, sanitation and quick means of transportation & communication creates attraction for foreign investment. An additional objective of economic development is to develop the infrastructure facilities.
Following are the cultural & political objectives of economic development:
19) To Attain Higher Education
An extra target of economic development is to provide higher education to population within the country. In Pakistan literacy rate is very low. Low literacy rate leads to backwardness and ignorance in population. Literacy rate is 57 % and amount allocated for education is 2.0 % of GDP in Pakistan.
20) To Control Un-productive Expenditure
Our government has to allocate a huge amount for un-productive expenditures. Objective of economic development is to control the un-productive expenditure. Government has to pay 2.9 % of GDP as an interest charges on internal debts.
21) To Maintain Political Stability
Political situation is not satisfactory in Pakistan. There is instability in government and its policies. An extra objective of economic development is to maintain political stability. Government is strongly criticized by almost the whole population in Pakistan.
22) To Remove the Feudalism
Feudal-lords and landlords are exploiting poor tenants. One more objective of economic development is to remove the bad role of feudalism.
23) To Productive Use of Funds
An additional objective of economic development is to use the funds of government in productive ways. Use of funds must provide more utilities to public. It will increase the social welfare.
24) To Stabilize the Polices
Stability in fiscal and monetary polices is necessary for the economic stability. Another aim of economic development is to maintain the stability in various policies.
Following are the technological and miscellaneous objectives of economic development:
25) To Use Modern Technology
The purpose of economic development is to enable a country to use modern technology. Use of modern technology will lead to more output and better quality.
26) To Reduce the Dependence
Developing countries have to depend upon rich countries. Poor countries receive loans and grants from them. So they interfere directly in the policies of developing countries for their own interests.
27) To Fair Distribution
Distribution of resources is not suitable in Pakistan. A lot of resources are in the hands of only some people. Fair distribution of resources is also an objective of economic development. 20% extremely rich population has 50.02 % of national resources, while 20% poorest population has just 6.37 % of national resources in Pakistan.
28) To Improve Skill
Economic development improves the skill and training of worker. It increases the efficiency of labour that causes more and better output.
29) To Self Reliance
Adoption of self-reliance policy is possible due to economic development. Economic development reduces the dependence on other countries and their interference.
30) To Develop Money Market
Another motive of economic development is to develop the money market. Developed money market is essential for a country. It will create social welfare for population. Growth rate of finance sector is –3.6 %.
Today, economic development is compulsory for every nation. Without economic development social welfare, progress & prosperity, high living standard and reduction in poverty & unemployment are impossible.