This is a surplus that can be sold in the market for earning income. It raises the purchasing power, employment and output in other sectors of the economy. The country as a result will develop because of increase in national income. .
Foreign Trade: The country which enjoys favorable balance of trade and terms of trade is always developed. It has huge forex reserves and stable exchange rate. . Economic System: The countries which adopt free market mechanism (laissez faire) enjoy better growth rate compared to controlled economies.
It may be true for some countries, but not for every country. - - Economics of Development and Planning . . .
Non- Economic Factors ‘Economic Development has much to do with human endowments, social attitudes, political conditions and historical accidents. Capital is a necessary but not a sufficient condition of progress. – Ragnar Nurkse. .
Human Resources: Human resource is named as human capital because of its power to increase productivity and thereby national income. There is a circular relationship between human development and economic growth. A healthy, educated and skilled labour force is the most important productive asset. Human capital formation is the process of increasing knowledge, skills and the productive capacity of people.
It includes expenditure on health, education and social services. If labour is efficient and skilled, its capacity to contribute to growth will be high. For example Japan and China. .
Technical Know-how: As the scientific and technological knowledge advances, more and more sophisticated techniques steadily raise the productivity levels in all sectors. Schumpeter attributed the cause for economic development to innovation. . Political Freedom: The process of development is linked with the political freedom.
Dadabhai Naoroji explained in his classic work ‘Poverty and Un- British Rule in India’ that the drain of wealth from India under the British rule was the major cause of the increase in poverty in India. . Social Organization: People show interest in the development activity only when they feel that the fruits of development will be fairly distributed. Mass participation in development programs is a pre-condition for accelerating the development