Here's the second question: If You are a policy maker for a developing economy which dimension should interest you more growth or development.
Growth of an economy is generally measured in terms of gross domestic product (GDP). It is assumed that growth leads development of the economy. On the other hand, development of a nation depends on many socio-economic parameters such as education, health, employment, women empowerment, financial inclusion and income inequality besides economic growth. Growth is necessary but not sufficient to develop a country, mainly a developing country. A policy maker needs to understand the developmental requirements of the country and then frame a policy to achieve the necessary growth to obtain the desired developmental goals.
Throughout the world, the country's progress is measured in its economic growth, GDP. The growth oriented policies are easy to frame and monitor. It is assumed that economic growth percolates from top to bottom and policies are framed mainly to increase the overall income of the nation.
For instance, very high GDP growth rate of 7 - 9 % for 30 years from 1980 in China helped the country to reduce people below poverty line by 500 million. Similarly, in India also the high GDP growth lead to rapid decrease of people below poverty line since 1991. Due to high growth, many employment opportunities were created in China and India.
China's growth was by rapid industrialization which created millions of jobs and deceasing its dependence on agriculture. However, India's growth was led mainly by IT, software and service sector that created employment for few but generated huge revenue in the form of taxes. The income from service sector helped to support the agriculture, education and health. When service sector stagnated, employment has become a major problem in India as it does not have strong industrial base to support ever increasing workforce due to its demographic dynamics.
The problem is partly due to growth oriented policies to drive the country. As it is evident from India, the growth benefits the country initially but its further growth do not translate to overall development of the country. For example, recent unofficial employment survey shows that the present unemployment is highest in the last 45 years despite high GDP growth in the last 15 years. It only resulted income inequality in the society.
The growth of India in recent years mainly due to increase in efficiency of the industry and service sector because of exploitation of IT and software, and artificial intelligence. Further, top-down approach do not work in developing country when it is facing with huge unemployment a bottom level. If the policies are framed to address unemployment by supporting medium and small scale industries, and self employment, the result could have been different.
Further, major problems of the developing countries are lack of quality education and health. India is producing thousands of unqualified college students. Not only higher education but basic education required strong policy frame work to improve quality of workforce. Quality education is not possible without health and nutrition food for children. This demands minimum income for the poor families to sustain above poverty line and lead a respect living.
Such a complex requirement of the society can not be addressed by GDP growth alone. Policies are required to attain quality education at school and university level, not just enrollment. Poor spend nearly 50 per cent of their income on health related problems. With increased privatization of health, the poor denied their basic right to health. Insurance policies may help partially but not a long-term solution.
In developing countries like India, agriculture supports nearly 50 % of its population though its contribution to GDP is less than 25 %. There is a need to increase productivity of the agricultural land to increase farm income as well as provide food at affordable prices.
Therefore, what is evident from the above discussion is that growth only helps to certain extent in short-term. To achieve overall long-term and sustained development of a country, the policy makers need to address requirement of universal health care for all, quality education, minimum income for the poor. Without strong industrialization, service sector alone cannot run the engine of the economy. Policies also need to address to environmental issue of the economic growth. Without development objectives, growth is meaningless.
Growth of an economy is generally measured in terms of gross domestic product (GDP). It is assumed that growth leads development of the economy. On the other hand, development of a nation depends on many socio-economic parameters such as education, health, employment, women empowerment, financial inclusion and income inequality besides economic growth. Growth is necessary but not sufficient to develop a country, mainly a developing country. A policy maker needs to understand the developmental requirements of the country and then frame a policy to achieve the necessary growth to obtain the desired developmental goals.
Throughout the world, the country's progress is measured in its economic growth, GDP. The growth oriented policies are easy to frame and monitor. It is assumed that economic growth percolates from top to bottom and policies are framed mainly to increase the overall income of the nation.
For instance, very high GDP growth rate of 7 - 9 % for 30 years from 1980 in China helped the country to reduce people below poverty line by 500 million. Similarly, in India also the high GDP growth lead to rapid decrease of people below poverty line since 1991. Due to high growth, many employment opportunities were created in China and India.
China's growth was by rapid industrialization which created millions of jobs and deceasing its dependence on agriculture. However, India's growth was led mainly by IT, software and service sector that created employment for few but generated huge revenue in the form of taxes. The income from service sector helped to support the agriculture, education and health. When service sector stagnated, employment has become a major problem in India as it does not have strong industrial base to support ever increasing workforce due to its demographic dynamics.
The problem is partly due to growth oriented policies to drive the country. As it is evident from India, the growth benefits the country initially but its further growth do not translate to overall development of the country. For example, recent unofficial employment survey shows that the present unemployment is highest in the last 45 years despite high GDP growth in the last 15 years. It only resulted income inequality in the society.
The growth of India in recent years mainly due to increase in efficiency of the industry and service sector because of exploitation of IT and software, and artificial intelligence. Further, top-down approach do not work in developing country when it is facing with huge unemployment a bottom level. If the policies are framed to address unemployment by supporting medium and small scale industries, and self employment, the result could have been different.
Further, major problems of the developing countries are lack of quality education and health. India is producing thousands of unqualified college students. Not only higher education but basic education required strong policy frame work to improve quality of workforce. Quality education is not possible without health and nutrition food for children. This demands minimum income for the poor families to sustain above poverty line and lead a respect living.
Such a complex requirement of the society can not be addressed by GDP growth alone. Policies are required to attain quality education at school and university level, not just enrollment. Poor spend nearly 50 per cent of their income on health related problems. With increased privatization of health, the poor denied their basic right to health. Insurance policies may help partially but not a long-term solution.
In developing countries like India, agriculture supports nearly 50 % of its population though its contribution to GDP is less than 25 %. There is a need to increase productivity of the agricultural land to increase farm income as well as provide food at affordable prices.
Therefore, what is evident from the above discussion is that growth only helps to certain extent in short-term. To achieve overall long-term and sustained development of a country, the policy makers need to address requirement of universal health care for all, quality education, minimum income for the poor. Without strong industrialization, service sector alone cannot run the engine of the economy. Policies also need to address to environmental issue of the economic growth. Without development objectives, growth is meaningless.
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