4.3 Define and explain a under-developed economy. What are the basics
Characteristics of under-developed countries?
Ans: According to the "United Nations Experts Committee," an under- Pr -7 developed country is one whose per capita real income is low when compared with the per capita real income of the US, Canada, Australia and Western Europe. According to Prof. Ragnar Nurkse , "the under-developed countries are those which, compared with the advanced countries, are under-equipped with capital in relation to their population and natural resources". Even this defination is not fully satisfactory. The Indian Planning Commission has defined an under-developed country as one "which is characterized by the coexistence, in greater or lesser degree, of unutilized or under-utilized manpower on the one hand and of unexploded natural resources on the other". According to Colin Clark , who was one of the pioneers in the studies of under-developed economies, "economic development consists in the progressive enlargement of tertiary occupations in the economy". According to this definition, under-developed economies are those in which the primary occupations predominate. In current literature, all countries with low per capita income are generally classified as under-developed. In general, all countries with per capita income less than 10% of that of the US (31,910 US dollars) may be regarded as under developed countries. India , with a per capita income of 2,230 US dollars, is one of the most under-developed countries in the world.
Some of the basic common characteristics are mention below:
(1) Low per capita income (2) Deficiency of capita (3) Excessive dependence on Agriculture (4) Rapid Growth of Population (5) Large –scale Unemployment (6) Under-Utilization of Resources (7) Foreign Trade Orientation (8) Low Levels of Skill.
4.5 "International trade plays an important role in economic development''-Justify the statement.
Ans: International trade plays a very important role in economic development since it allows a country to escape from its own limitations of natural and human resources and concentrates its efforts in the areas in which it has a genuine advantage. If there were no international trades, a developing country would have to grow on all fronts simultaneously. In that case, its growth could be seriously impaired by the limitations of natural resources and acquired human skills in many areas. A country bent on growing through an industrialization policy may benefit if it can concentrate at first on light manufacturing and exporting consumer goods in return for capital goods made by heavy industries in more developed countries. In this way, a developing country can gain many of the benefits of more efficient production that it could not hope to match for a long time to come.
Among the other advantages of specialization that international trade makes possible are the opportunities to take advantage of the economy of scale by producing far more goods than would be required to meet the domestic demand in a state of self-sufficiency. A further advantage that may be significant for a developing country is often called the advantage of "learning by doing". On the other hand, economic growth with a heavy dependence on the foreign trade often brings in the serious problem of the balance of payments in a world of fixed exchange rates. In a developing country, capital goods are often one of the main limitations to growth. In a closed economy, the problem of scarce capital appears as a resource problem since there are not enough resources to produce capital goods at a rate as fast as desired. In an open economy the same problem appears as a foreign exchange problem since there is not enough foreign exchange to buy all the imported capital goods that are desired for faster economic growth. In both cases, the problem is the same, i.e., it is very difficult to obtain a desired level of capital goods. One way is to make the capital goods at home; the other way is to make consumer goods at home and then sell them abroad in exchange for capital goods. A second problem in a developing country is related to the import of consumer goods, if the country's economy is an open one. As the country's productivity rises, disposable income and the standard of living also rise. In many developing countries, the goods produced at home are mainly in the necessity class with low margins of profit, whereas imported goods tend to have a higher profit margin. In such a situation, the rise in income that accompanies economic growth brings with it a shift in the pattern of consumer demand, with a larger proportion of consumers opting for the purchase of imported goods. Unless something happens to offset this shift in consumer demand, economic growth can be accompanied by an increasingly severe problem of the balance of payments. This problem can be offset in two ways. The first way is for the country to develop export commodities with rapidly expanding demand for them in foreign countries. In this case, the exports can expand rapidly to match the increasing imports. A second way is for its domestic growth to take place partly in the sec-called "import-substitute" industries. Growth of industries that compete with Imports can keep the rapidly expanding demand for luxury goods from being translated into an equally rapidly expanding demand for their imports.
• Write a brief note on interrelationship between social, economic and scientific factors.
Ans : Economic development is hardly possible without social change, and science, engineering and technology are the most important factors for changing a traditional society into a modern and developed one. Engineering is the ( I applied science and technology is the applied engineering. This clearly shows that social, economic and scientific factors for development are highly interrelated. Technology, arising from scientific research followed by technological development, has been a prime mover m creating the kind of world in which we live today. From the shaping of the first stone tools, the discovery of the wheel, the lever and the plough and learning the use of fire, man has assiduously shaped science to serve his material needs. Science, therefore, is not a new phenomenon! What is different today is that the discover of natural laws through scientific research has given a new dimension to technology. As a result, technology now has such a massive impart on our lives that it offers on the one hand an almost infinite promise to relieve poverty and provide healthy conditions of life, but on the other hand it also threatens our pattern of life, the global ecology and even the Survival of the human race.
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