Development

Introduction

What types of “development” do you know? You may have heard of personal development, professional development, or others, but what do we mean by economic development?

The notion of development is closely linked to the concept of progress, and in economics it refers to a set of factors that - in general terms - allow the possibilities for people to have better lives. It sounds simple, but that idea of development is profoundly powerful.

Economic Development:

In most economics textbooks, economic development is presented as the “process of growth of an economy, along which new technologies are applied and social transformations take place, with the consequence of a better distribution of wealth and income.” (taken from Mochon and Beker, 1994).

Underdevelopment, on the other hand, would refer to the situation of less advanced countries, characterized by low per capita income, low savings and insufficient technological endowment, thus limiting economic growth.

As will have been noted, both definitions give central weight to the size and growth of the economy (measured by GDP). However, it is important to note that GDP may not be sufficient as a measure of development. Without going any further, it is enough to look at the ranking of the countries with the highest per capita income in the world and compare it with the social conditions of their populations to corroborate that it is evidently not enough to have a thriving economy to be considered a developed country. We are talking, for example, about some oil-producing countries in Asia, where a few families control almost all the resources. In any case, it is evident that a higher level of income allows access to more resources and -generally- a better life. Or rather, not having access to basic resources such as a home or a job severely deteriorates living conditions.

In addition to per capita income, some relevant indicators when studying development are:

Education and literacy levels.

• Access to quality health and disease control.

• The level of unemployment

• Progressive (or not) income distribution.

• Population growth rate

• The export basket (producing high value-added goods is usually a symptom of greater development than exporting raw materials).

• Diffusion of technology among the population

• Conditions of equality and non-discrimination among the population

• A democratic and peaceful system

How is it calculated nowadays?

Currently, the most widely used indicator to measure and compare development between countries is the Human Development Index. It consists of linking three relevant dimensions: longevity (life expectancy), education (average level of education attained) and income (GDP per capita).