Question

Answer the following questions

Explain any two definitions of economic development.

Answer 1

i. Definition by Meier and Baldwin
‘Economic development is a process whereby an economy’s real national income increases over a long period of time’.
According to Meier and Baldwin, the economic development of a country is basically a ‘process’ that requires an ‘increase in the national income’ of an economy. This increase in the national income should be of ‘long term’ in nature as the development will only said to happen when the national income is sustained over a long period of time. Economic development also includes a rise in the per capita income, improvement in the quality of life, rise in employment, improved infrastructure, growth and welfare of a country. All these attributes are of long term in nature. Thus, we can say that a long term increase in real national income leads to economic development of a country.

ii. Definition by Milton Friedman
‘Economic development is an innovative process that leads to structural transformation of social system’.
According to Milton Friedman, economic development is depicted by a process which ultimately results in a structural transformation of the social system. In other words, the process of economic development gives rise to a transfer or shift of the population from the agriculture to industrial sector and then finally to the service sector, thus, giving way to structural transformation in the economy.