The Dynamics of Development

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The Dynamics of
Presented by:
Nikolai Gabbuat
Neville Fajarito

Developmental Economics
 Branch

of economics that analyze
the cultural and political
requirements for affecting rapid
structural and institutional
transformation of the entire society
in a manner that will most efficiently
bring the fruits of economic progress.

Economic Growth
 Refers

to the steady process by
which the productive capacity of the
economy increased overtime to bring
about rising levels of national output
and income.
 Growth means increase in output or

What is Economic Development?
 Refers

in the process of improving
the quality of human lives.
 Development means both more
output or production and changes in
the technical and institutional
arrangements by which the factors of
production are produced and

Characteristics of Economic
 Increases

in output or production has
to be sustained over a long period of
 Changes in economic structure would
spread out in the entire economy.
 Growth has to be accompanied by an
increase in efficiency.

Major Issues of Developmental
 Poverty
 Inequitable

Distribution of Income
 Unemployment
 Population Growth
 Illiteracy
 Malnutrition
 Rural Stagnation/Urban Migration
 Environmental Decay

The Objective of the Development
Process: Man
 Roads

and bridges, better
technology, increase in efficiency are
preconditions for development, but
they are never wanted for their own
sake. They are only means towards
something else – to provide more
and more people with more and
better things and opportunities.

The Objective of the Development
Process: Man
 The

objective of any development
process is aimed for the upliftment of
the socio-economic welfare of man.

Increase in Real Income
 We

can see that when the necessary
social overhead capital are provided
and better technology and efficiency
are worked for, real income per
person increases. Increases in real
income represents availability of
more goods and opportunities for
more people.

Increase in Real Income
 With

more goods and opportunities
provided for more people, the higher
will be the level of development of
more people. With hard work,
necessary incentives, and an
enlightened government, the specter
of poverty, starvation, and gloom
would be permanently eradicated.

The Human Factor in Economic
 If

man is the object of any
development process, man is also the
central figure in any development
process. All the factors of production
like land, capital, technology would
only assume importance of man, with
his diligence and ingenuity, would
make use of them.

The Human Factor in Economic
Man is the central figure in economic
 It is man who possesses and applies
the stock of knowledge that he has for
use in the process of production.
 The application of the stock knowledge
to the process of production is called
innovation. Through innovation, man
can solve his economic problems.

The Human Factor in Economic
 Man

with his abilities – Innovation –
Goal = Man and his needs

Classifications of Economies
 Less

Developing Countries

– Low income: <$875
 Developing


– Lower middle income: $876-$3465
 Newly

Industrializing Countries

– Upper middle income: $3466-$10725
 Developed


– High income $10725

Characteristics of Less Developed
 Many

of the presently developing
countries are poorer today than the
presently developed countries at the
time that they began developing.

Characteristics of Less Developed
 In

general, developing countries are
agrarian rather than industrial. Most
of the people live in rural areas, and
a large part of the national income is
generated in agriculture. Productivity
in agriculture is very low. Workers are
largely self-employed.

Characteristics of Less Developed
 Income

is more inequitably
distributed in developing countries.
While the great majority of the
people are poor, only a few percent
of the people control the nation’s
income and wealth. Disparity in
income and wealth is often causes by
social and political tensions.

Characteristics of Less Developed
 In

international trade, the bulk of
exports include only a few products,
rather than a diversified range.

Characteristics of Less Developed
 In

industry, most of the manufactured
products are imported. Since import for
these products grows more rapidly than
exports of mostly agricultural products,
the problem of balance of payments
 BOP problem arises when a country pays
more for its imports than what it can
receive as income through its exports.

Structural Changes in the Economy
and Society

The improvement of the living standards of
the poor.
The reduction of income disparities
An acceptable balance of payments
Advances in productivity, science, and
The promotion of social development and
social justice.

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