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Economic Development

Discussion in 'Economics' started by lectportal, May 24, 2019.

  1. lectportal

    lectportal Administrator Staff Member Administrator User

    The term "economic development" has been defined as the process whereby the level of national production (that is, national income) or per capita income increases over a period of time. The main objective of economic development is to raise the standard of living and the general well-being of the people in an economy. It involves changes im the structure of the economy that include:

    (1) emphasis on developing manufacturing industries as opposed to agriculture,

    (2) movement of labour from rural to urban industrial areas,

    (3) less reliance on imported goods in preference to home-produced goods.

    (4) revision of abolition of the outdated land tenure system that hinders the acquisition of land for industrial projects, and

    (5) establishment of a stable political system.

    The words "growth" and "development" are often used synonymous in economic discussion, but they can be distinguished from each other. Economic growth means more output, which implies more input and more efficiency- that is an uncreaseiin output per unit of input.
    Development, on the other hand, implies that there are both more output and changes in the technical and institutional arrangements by which the output is produced. It implies changes in the structure of outputs and in allocation of inputs by production sectors.

    To use an analogy, when we refer to the growth of human being, we usually relate it to changes in heigh and/or weight of the person. However, when we talk about a person's development, we draw attention to the changes in functional capacity, such as the learning capacity.
    Growth and development may mean the same thing only to a point where the economy loses it capacity to adapt to changed circumstances. In early stages, any economy that grows is likely to develop, and vice versa. But once a country has achieved a considerable measure of development and growth, it has to keep on growing, and this is when problems begins to set in. In less developed countries, where incomes are generally low, or there is difficulty in adapting to economic opportunities available, growth and development go hand in hand.
    It is almost impossible, however, to contemplate development without growth because a change in function requires a change in size. Unless an economy can set a limit for the use of resources for the production of food for the country's consumption, it will be unable to allocate a portion of it resources go other types of activity.

    The measurement for the rate of growth is the national income. Thus, if the national income of Nigeria, for instance rises at the rate of 5% a year, we say that 5% is the measure of the economic growth of Nigeria. Economic growth, therefore, is the rate at which the economy develops per annum. Many countries have national economic development plans in which they determine the growth rate within the period of the plan.
    The following are the factors affecting economic growth:
    (1) the quality and quantity of capital available;

    (2) the skills and efforts of the working population;

    (3) organizational factors, such as specialization, and technological improvements, such as the discovery of fertilizers;

    (4) the general economic climate involving trade relationships with other communities, the extent of monopoly and the impact of government policy.

    The following are some characteristics of an economically underdeveloped or developing country.

    Underutilization of National Resources
    National resources include land, waterways, flora and fauna of land and sea, and minerals. All these are underutilized, or not fully tapped and exploited.

    Unemployment and Underemployment
    "Unemployment" is defined as a situation where a person is available, willing and able to work but unable to find a job in any sector. The rate of unemployment is the percentage of total labour force that is unemployed.
    "Underemployment" is defined as a situation in which Labour is not fully engaged or where there is low productivity of employment or where an employee is given a job that is below his ability and capacity.
    Both unemployment and underemployment exist in Nigeria, and have become very serious problems indeed. Together, they are an unwholesome characteristic of an underdeveloped economy.

    Dependence on Agriculture
    Agriculture is the primary sector of the economy. The ratio of the contribution of agriculture to the total level of output is significantly higher in developing countries than in developed countries.
    Developing countries are primarily agrarian. Most of the people in such countries cultivate. The land on small plots, using traditional methods that are inefficient.

    Rapid Population Growth
    Birth-rates are very high in developing countries, and the fear is that population growth may offset or distort plans for economic development. Any progress recorded in the economic area may only allow a greater number of people to survive.

    Low Level of Technology
    The term "technology" refers to use of scientific knowledge to produce the material necessities of society. The large increase in the productivity of workers that has taken place in developed industrial societies are due mainly to improved methods of production.
    In developing countries, however, there is a lower level of technology. Tools developed centuries ago are still in use, including the hoes and machetes employed in agriculture.

    Poverty and Low Income Per Capita
    These are characteristic of developing countries. They make saving difficult and thus, hinder capital accumulation, which is vital for economic development.

    The rest are
    Poor infrastructural Facilities
    Low Level of Manpower Development
    Reliance on Foreign Trade.

    The characteristics features of developing economies described above also constitute the constraints and problems of their economic development. We shall now try to see how these problems affect development in Nigeria.
    The availability of abundant natural resources is an important prerequisite for a high level of economic development.
    Nigeria is well endowed with the following resources;

    1) human resources

    2) land and allied resources like forests, waterways, plant life and wildlife

    3) mineral resources.

    In spite of the availability of these resources, however, Nigeria has not achieved an appreciable level of economic development because of the following factors.

    Inadequate Capital
    This is due to the mass poverty and low per capita income of the people which make saving difficult. The traditional extended family system is also a drain on the income of those who have reasonable earnings. The seriousness of the lack of capital in the Nigerian economy is borne out by the open criticism of some public officials who complain of the financial constraint in the execution of government projects.

    Inadequate Infrastructural Facilities
    Infrastructures include roads, railways, irrigation systems, hydroelectric power-stations, postal and telecommunication systems, schools, hospitals, harbors and waterways. The big cities and state capitals such as Lagos, Port Harcourt, Ibadan and Kaduna are fairly well provided with infrastructures.

    Low Level Manpower Development
    Skilled labour which includes business leadership or entrepreneurial ability, high-level manpower and intermediate high-level manpower, is not adequately supplied. Most studies of undeveloped countries suggest that a low education level is a serious barrier to development and, thus, urge an increase in expenditure on education.

    Low Level of Technology
    Technological advancement is still very slow in Nigeria. In terms of modern technology, we still use obsolete methods and equipment in agriculture and other sectors of our economy. Until their scientists and technologist are able to introduce innovations into the economy, or the government find means to finance the adoption of appropriate ones from abroad, this means that economic development still has a long way to go.

    Problem of Social and Cultural Institutions
    Economic development is synonymous with change. The people of the country must be willing go accept changes that were hitherto strange or foreign to them. Social and cultural institutions like the land tenure system, the extended family system, religious institutions and other established institutions and customs are difficult to change and are, therefore, a serious handicap to economic development.

    Political Instability
    Political instability is a problem to economic development. It scarce away investors. Nigeria is a case in point. Every successive military regime tends to see things wring in the development plans made by the regime it overthrew and it begins to review the one it inherited or draw up a new one altogether. But economic development plans cannot take off under conditions where political uncertainty prevails. Nigeria's Faith Development plan would have been implemented in 1986 if not for the political uncertainty caused by the coup of December 1984.
    To summarize, the low level of economic development in Nigeria is not due to lack of resources but due to the underutilization of the resources.

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