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Development means positive change. The positive change in overall sector of economy is defined as economic development.
Economic development is multi-dimensional aspects of positive change in social economic, cultural, political sector with economic growth.
Economic development is very difficult to define in a single definition.
The various economists have defined economic development in different ways.
Following are the main definitions of economic development:
According to Arthur Lewis, “Economic development means the increase in per capita production.”
According to Meier and Boldwin, “Economic development is a process where by an economy’s real national income increases over a long period of time.”
According to G.M. Meier, “Economic development is the process whereby the real per capital income of a country increases over a long period of time.”
According to B. Okun and Richardson, “Economic development is a sustained, secular improvement in material well-being which we may consider to be reflected in an increasing flow of goods and services.”
According to Professor Dudley Seers, “Economic development is the reduction in unemployment, poverty and income inequality.”
Now, it is clear that economic development is a multidimensional process which involves changes in social structures, popular attitudes, national institutions, acceleration of economic growth, reduction of inequality and reduction of poverty.
Indicators refer to the measuring tools.
The indicator of economic development means the measuring tools of economic development.
In general, the main objective of an economy is to maximize production of goods and services, which will positively increase economic welfare.
Therefore, it is necessary to understand the indicator of measuring economic development.
Following are the major indicators of economic development:
According to this concept, economic development is an increase in real GNP over a long period of time.
In this criterion, economic development is the increase in production of an economy.
Thus, economic development can be measured in terms of increase in real national income of an economy over a long period of time.
This criterion does not consider a short period rise in national income but a sustained increase in real income.
The major drawback of this indicator is that it does not consider the changes in the population growth, pollution, distribution of income in the economy.
Per Capita Income indictor is widely used an indicator of economic development which shows difference between developed and developing countries.
According to this concept, economic development is a process whereby real per capita income of a country increases over a long period of time.
This shows that economic development is also related to poverty alleviation.
It also considers the changes in population growth.
On the basis of level of per capita income countries are classified as developed or developing.
It is not a good indicator of economic development because the rise in per capita income may not guarantee the improvement in living standard of people.
Physical quality of life index is a non-income indicator of economic development which was developed by Moris D. Marris.
It consists of three indicators: life expectancy at birth, infant mortality rate and literacy rate.
PQLI is measured in a scale of 1−100.
If such value crosses 50 the countries are advanced and below 50 mean undeveloped country.
If people live longer and are literate then, PQLI value will be higher.
The main problem in this indicator is that it doesn’t include income indicator.
United Nations Development Programme (UNDP) first published World Human Development Report in 1990 A.D.
Since, then it has been the most popular indicator of economic development.
This indicator is based on three goals of human development which are:
(a) |
Long and healthy life |
It is measured by life expectancy at birth. |
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(b) |
Knowledge and education |
It is measured by adult literacy rate (2/3 weight) and mean year of schooling (1/3 weight). |
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(c) |
Standard of living |
It is measured by real gross national income i.e. per capita income of a country adjusted for differing purchasing power parity (PPP) of each country’s currency. |
It is a composite index scaled from 0−1 and expressed in 3 digits after decimal point.
Based on above three objectives of development, it classifies countries into four groups.
SN |
Classification of countries |
HDI value |
(i) |
Very High Income Development |
0.800 and above |
(ii) |
High Human Development |
0.700 − 0.799 |
(iii) |
Medium Human Development |
0.550 − 0.699 |
(iv) |
Low Human Development |
0 − 0.549 |
According to human development report 2015 HDI value for Nepal is 0.548.
So, Nepal falls under low human development.
Norway has highest human development having HDI value 0.944 and Niger has lowest HDI value which is 0.348.
World Bank and ILO suggested to the under developed countries to adopt a basic human need approach in their 5-year plan. This index pays more attention to fulfill basic needs of common people in terms of health, education, water, food, clothing, housing, employment, etc.
The main objective of this approach is to raise productivity and remove poverty by providing basic needs to the common people.
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Accounting Equation |
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Basic Journal Entries in Nepali |
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Basic Journal Entries |
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Journal Entry and Ledger |
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Ledger |
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Subsidiary Book |
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Cash Book |
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Trial Balance & Adjusted Trial Balance |
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Bank Reconciliation Statement (BRS) |
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Depreciation |
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Final Account: Class 11 |
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Adjustment In Final Account |
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Capital and Revenue |
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Single Entry System |
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Non-Profit Organization (Non-Trading Concern) |
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Government Accounting |
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Goswara Voucher (Journal Voucher) |
The developing countries are those countries which have lower per capita income as compared to developed countries like USA, UK, Japan etc.
Developing countries are also known as underdeveloped countries or poor countries.
The countries like Nepal, India, Pakistan, Afghanistan, Ethiopia etc are developing countries.
Some common characteristics of developing countries are as follows:
The most important feature of developing countries is low per capita income.
The PCI of Nepal is only US$ 862, which is very low as compared to developed countries USA (US$ 55,230), Canada (US$ 51,630), Japan (US$ 42,000).
It shows that per capita income of developing countries is very low as compared to developed countries.
The people living in developing countries are unable to fulfill their basic needs.
A large proportion of population in these countries lives below poverty line and suffer from vicious circle of poverty.
For example:
In Nepal, 21.6% of total populations are under poverty line.
In India 28.5% of total population are under poverty line.
In Bangladesh 31.9% of total population are under poverty line but in developed countries the population below poverty line is very low.
High population growth is a common characteristic of most of developing countries.
The population growth in these countries is between 1 to 3% per year.
For example the population growth of Nepal is 1.35%, India is 1.31%, Pakistan is 1.55%.
Infant and child mortality rate are also high in developing countries.
Due to illiteracy and ignorant, social, religion and economical causes.
In developing countries more people lives in rural areas.
Agriculture is a single source of income and employment for most of people in these countries.
For example in Nepal 65.7%, in India 64%, in Bangladesh 74% labour forces are engaged in agriculture respectively.
Developing countries are rich in natural resources like water, mineral and forest resources.
Nepal is also rich in water resources it can produce 83,000 MW hydroelectricity but currently less than 1% is utilized.
African is rich in mineral resources like copper and gold, Latin America countries is rich in minerals like petroleum, iron and lead but these natural resources are not being properly utilized.
High unemployment and underemployment is another characteristic of developing countries.
High dependency on agriculture, low industrial development, lack of proper utilization of natural resources, lack of capital, lack of manpower and technology have created unemployment and underemployment in developing countries.
Developing countries are also backward in technology.
They use labour intensive method to produce goods and services.
The cost of production is high in comparison to capital intensive method.
These countries are unable to use the capital due to illiteracy, lack of skilled manpower and less financial capital.
Dualistic economy means two types of economy: one, subsistence type of rural economy which is technological back and another, modern type of advanced technology based on industries and business.
In the rural areas, people use primitive farming and there are also old type of small and cottage industries.
But in the urban areas, there are large and modern types of industries, which use advance technology.
Developing countries are exporting primary product mainly agricultural goods.
The development of secondary and tertiary sectors are also very poor so that these countries export primary product of lower value goods and import finished types of higher value goods.
The social services like education, health, safe drinking water are not adequate to the people of developing countries.
Since, social services have a great linkage with the living standard of people; so, education represents level of skill, capability and knowledge among the people.
Thus, in developing countries people lack most of social services which shows lower standard of living.
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