Indicators of economic development

There is difference of opinion among the economists regarding the indicators or measure of economic development.Norman Hicks and Paul Straiten Opine-"There is no consensus on any singe measure of development" .The economics development is the result of long term changes.Due to these changes,it is difficult to proper the definite criteria of development.The criteria of development change with the passage of time.The main indicators or criteria of development can be explained as follows.

1. Increase in per capital income criteria:According to the economists like Meier,Paul Baran,Becanan and Elis the increase in per capital income is the indicators or criterion of economic development.
2. Increase in gross national product criterion:The economic development is defined as the increase in production of any economy over a time period.The best measure of production is the real GNP or GNP in constant prices.The economists such as Simon Kuznets's,Meier and Baldwin,Meade and so on support this view.According to Meade-"The total income is the best medium of welfare than per capital income."
3. Physical quality of life index criterion:The belief that economic growth does not trickle down to the poor has given birth to the non-income indicators of development.One of them is PQLI,which was presented by Morris D.Morris.The PLQI is the composite of three index life expectancy,infant mortality and literacy.The data relating to these indexes are ranked from 1 to 100.The zero indicates inferior and 100 indicates superior performance.The average of three indicates gives composite index.]
4. Basic needs criterion :The basic needs criterion developed by world banks a complement to the per capital income criterion.The shorthand description of basis needs was incomes+public services+participation.According to this criterion,the development is evaluated on the basis of the fulfilment of the basis needs of population and poor.The signification of this criterion is obvious from the statement made by Mahabub UI Haq-"The growth of GNP is absolutely necessary but that in must be directed intelligenlly toward solving the problems of mass poverty."
5. Human development index criterion:The HDI is the most recent indicators of development.This criterion by United National development programme as a new way of measuring human progress in 1990.This indicator is related to three spec ts of human life income for decent living,educational attainment and life expectancy.
   

Characteristics of developing countries

First of all it is proper to be clear about the meaning of the term developing country.Various alternatives names are used to indicate the economically backward countries such as underdeveloped countries,less developed countries.Third word countries and developing countries.The international organizations including the world bank use the term developing countries which have been in common use.The term third world denoted not allied with either of the two other world the capitalist countries and the communist countries.The first use of the term of third world is often credited to the late Indonesian president Sukarno who use the terms on April 18,1955 at the opening of the banding conference.The poorest countries of the world are termed as least developing countries and even fourth world countries.
A developing countries is one where the process of economic development has has started,but not completed.In such county there is low rate of economic growth and high rate of population growth.There is no proper use of natural and human resources and the living started of people is miserably low.
According to Bauer and Yamey ,"The terms underdeveloped countries usually refer to countries or region with levels of real income and capital per head of population which are low by the standards of north America,Western Europe and Australia.
Almost all developing countries are poor in money terms.But they are diverse in culture,economic conditions,and social and political structures.

GNP by expenditure method

According to this method GNP consists of the following elements:

1. Private consumption expenditure :The expenditures made by individuals on durable goods like car,washing machine,computer,television set and non-durable goods like cloths,shoes,food,beverage product in a country during a year are included under this handing.
2. Gross domestic private investment: The expenditure made by individuals on capital goods like building,machine,equipment are included in this heading.It also includes the investments made in new and replacement of old capital.But the expenditure made on the goods services produced in past and the financial investments made in credit underestimates are not included.
3. Government expenditure on consumption and investment :The government spends on the goods like paper,pen,cloth and the services like employees,police and army.The capital expenditures made on national security and defence are also regarded as the consumption expenditure.The government invests on capital goods like machine,equipments for government enterprises.
4. Net foreign investment :The differences between export and import is the net foreign investment.Since,the imported goods are not produced in a country,they should mot be included in national income.The goods exported are produced in a country.Hence, the value of import should be deducted from the value of exports.If the result is positive,it should be added to other expenditures and if negative,it should be deducted from other expenditure.
   

Plan formulation

The process of plan formulation is as following:

1. The first step plan formulation is setting the objectives of the plan.First the objectives for overall economy are set and the objectives for different sectors are set.Without objectives,priorities and targets cannot be fixed The objectives of a plan may differ from country to country.The major objectives of a developing country like Nepal has been to accelerate the economy growth,poverty alleviation,increase employment opportunities,meet basic needs of people and so on.
2. Setting target :The target mean the objective stated in quantity.While fixing targets,the appropriate polices should also be adopted.According to Arthur Lewis,target are essential for a plan to be successful.
3. Determination of growth rate :The growth rate of the as a whole is determined.Similarly,the growth rate of agriculture and non-agriculture sector is also determined.The growth rate is determined on the basis of available resources and the need of the country.
4. Macro -economic projections :The macro-economics projections of national income,investment,and employment are made on the basis of relevant statistics.
5. Statement of policies :In general,the different sectoral,policies are stated in the plan.The policies work as the guidelines of resources is also made.The sectoral programs are based on the survey of sec tore. The policies on price,tax,incentive to private sector ans stated in the plan.
6. Sectoral planing :The detailed programs of sectors are also in the plan.Similarly,the sectoral allocation in preparing of resources is also made.The sectoral programs are based on the survey on sectoral condition.
7. Priorities in planing :The priorities as to the achievement of objectives and target are fixed in the plan.The need of the economy is unlimited,but the resources are limited.Hence,the priorities should be fixed taking into account the existing financial and physical resources in the economy.The main part of planing is to set the priorities.
   

Measures for poverty reducation

Measured for poverty reduction can be explained as following :

1. Create economics opportunities :The poor should be encouraged to use efficiently the resources with them.This reduces poverty in long term basis.For this,the price of the commodities using poor's labour should be increase the productivity of rural poor.The efficient system of transport,irrigation,technological progress,and marketing in cease the agriculture productivity.
2. Social services investing in people:The second key to long term poverty reeducation is investment in human capital.Hence,adequate investments should be made in education,health,sanitation,nutrition and so on.This increase productivity,income and enables the poor to utilise the new opportunities.As for example,improved nutrition and health enable the poor to work more.
3. Participation and access of the poor :The poor should be made available the resources and opportunities for productive investments. This enables them to participate in growth process.In an agricultural country,more land should be made a available to the poor.
4. Equity enhancing policies :Equity enhancing policies,particularly investment in human capital,in the long run, boost economic growth,which in run,alleviate poverty,When income are more evenly distributed,the member of individuals below the poverty line decrease.
5. Transfer and safety nets :Some population such as old or disable may not be benefited above program.Because,they do not participate in development works.So there should be transfer and safety net for them.This works as 'income insurance' against the temporary crisis misfortune of the poor.
6. Food prising and distribution policy:Food is an important part of poor's expenditure.The good food pricing policy increase the level of living,nutrition of the poor and protects from sudden fall in income.Hence,the program like food subside,food distribution,and food supplementation scheme should be adopted according to need.But an efficient administration and transport facilities are needed to the subsidy to the target group.
7. Public employment scheme :The employment scheme appropriate for the poor capable to work should be launched.Such employment at off time increase the employment and income of the poor.This scheme actually reaches the poor and is not moisturised.This works as an insurance for the rural poor.
8. Social security :The poverty can be reduced by providing social security to the old and those unable to work.But such provision is not feasible in the rural areas.Nevertheless income can be transferred according to poverty based on the assessment of country.
9. Increase in economic growth rate :The rate of economic growth will have to be increase and made sustainable for long-term poverty allocation.
   

Characterstics of the poor

The world bank has vividly depicted the lives of poor people-"poor people live without fundamental
freedom of action and choice that the better off take for granted.They often lack adequate food and shelter,education and health,deprivations that keep them from leading the kind of life that everyone values.They also natural disasters.They ate often exposed to ill treatment to influence key decisions affecting their lives.These are all dimensions of poverty."
The characteristics of the poor are as follows :

1. The place where poor live:Poverty as measured by low income is worst in rural areas.The problem of malnutrition,lack of education,low life expectancy,and substandard housing are more server in rural areas.The importance of rural poverty is not always understood. Because,the urban poor are more visible and more vocal than their rural counterparts.
2. Demographic characteristics :The household with the lowest income per person tend to be large,with many children or other economically dependent members.The poor people often lack access to modern family planning service.The aged often rely on the extended family in the rural areas.In urban ares joint family system is breaking up.The elderly are becoming more vulnerable.
3. Lack of assets :The poor usually assets as well as income.In rural areas wealth and status come from the land.When the poor own land,it is often unproductive and lies outside irrigate areas.They lack income and assets to credit.So they are unable to improve their land.Many of the poor have access to land but without the ownership rights.Tenancy is common which does not provide collateral.
4. Sources of income:Most of the poor do different earning activities.It is common for the poor to work as cultivators,small artisans,petty traders, wage labourers at various times of the year.The poor are relay self sufficient.Agriculture is the main sources of income for the poor.The greatest number of poor is in rural areas.Their live hoods are linked to farming.
5. Expenditure pattern :The poor spend nearly all their incomes on consumption.About half of the consumption is in the forms of food.Poverty is often the fundamental cause of malnutrition within the households.The distribution of consumption often favours males and income earning adults.
6. Status of poor in the society:In general,the poor have less access to publicly provided goods and services.In Nepal are 50 to100 percent higher than for the poor.Fewer social services are available to the poor.
   

Concept of proverty

Poverty is one of the problems of economics development.Hence,the main objective of economics development is poverty alleviation.Poverty is the condition of having insufficient resourcesor income.Poverty is the inability to sustain some minimal needs,such water,and health services.
according to the world bank 'poverty is the inability to attain a minimal standard of living'".It is a condition of life so degraded by disease,illiteracy,Malnutrition,and squalor as to deny its victims basius human necessities".
According to recent view of world bank "poverty is more than inadequate income or human development -it is also vulnerable and a lake of voice,power,and representation. "Hence, poverty means inadequate income,malnutrition,lace of assess to social services like education,healthcare,sanitation and lake of social and political status.The word bank has turned the people with per capital income of $275 as extremely poor and with per capital income of $370 as poor.In this sense Nepal falls into the category of etremely poor countries with per capital income of more $220.The income,consumption,life expectancy,Primary education of such people is low whereas the child mortality rate,malnutrition is very high.

Concept of human development

The objective economic development has remarkably changed in recent years.Today development not only implies the growth of output or of income,but also the improvement in the quality of output or income,But also the improvement in the quality of people's lives.The improvement in the quality of people's lives not only requires higher income but also requires higher standard of education,health and nutrition,a cleaner environment,and equal opportunity."This clearly implies that economics development is more than more increase in GDP.
In line with this idea World Bank ha been publishing social indicators of development since 1990.This focuses on infant mortality,primary schools enrolment rate,supply per capital,and share of agriculture in GDP beside per capital income.
Similar to this very idea UN DP(United Nation Development Programme.)has been published human resources development report each year since 1990.In the first publication of this report in 1990,UN DP defined human development in this way."people are the real wealth of a nation. The basic objective of development is to create an enabling environment for people to enjoy long healthy and creative lives.....Human development is a process of enlarging people's choices."The concept of human development reinforces the belief that people should participate in the development process and benefit from it.Hence,effort should be focused on improving quality of life.There is no meaning of growth if it not translated into the lives of people.

Contribution to indistrial development

Public enterprises had been established also with the objective of initiating industrial development in the country as well as to work as the model entrepreneur and employer.Their is no up to date data regarding this.However,according to industrial census of 1993/1994,the public enterprises of manufacturing sector have made significant contribution in industrilation.Manufacturing enterprises had contributed 10.2 percent to employment,15.9 percent to labour wage,19.6 percent to out put and 29.2 percent to value added.Government industries were more capital intensive than private sector industries.Labour productivity was also higher in government industrial than in private sector industries.
Government manufacturing enterprises must have remarkably stimulated private entrepreneurs in the form of model entrepreneur However,at present those retired from the job of government enterprises have initiated their own business,which prove this fact.Likewise,the proper provision of salary,allowance,rent,child induced private enterprises to make such provision.
Since government industries are mainly of import substituting natural their to earn foreign capacity to learn foreign exchange by promoting export is almost.In past goods such as handicraft,leather shore,magnesite and medicinal herbs were exported in negligiable quantity and are still continuing to some extent.However,government industries have in a sense made the country self-sufficiant in the production of commodities such as ciggarate,sugar,cement etc.In this way,these enterprises have contributed in fulfilling the basic needs of people even if to some extent.However,machine,equipments,raw materials,chemicals should be imported for these industries on account of which there is no large saving of foreign exchange.

Meaning of public enterprises

In past,government spread its net over wide rage of areas.In the development countries public enterprises was considered as an effective weapon of promoting equity and economic growth.Public enterprises estimated even in 19th century,but they were limited only to public utilities.
Particularly in developing countries public enterprises had covered wide areas.They had occupied commanding heights in the economy.These enterprises had been used as a tool to accelerate economic development,mobilise resources for economic development,provide employment to unitised for manpower and to utilise the unitised resources.However,in recent time,doubts have been raised regarding their effectiveness.The attention of the world has shift from nationalisation to privatisation.Nevertheless,the significance of public enterprises cannot be ignored in the context of protecting the interest of the people,improving their living standard and accelerating the pace of economic development of the country A.H.Hansen has,thus,rightly remarked,"Public enterprises without a plan can achieve something,a plan without public enterprises expanded rapidly during past five decades.
First of all it seems proper to make the meaning of public enterprises clear.Public enterprises have been given various names.They are called public sec tore undertaking,socialised industries,state-owned enterprises ,government enterprises,state enterprises ,Enterprise's is used in the government level.Due to this the term public enterprises creates confusion.In order to avoid confusion it is better to mention some of its definitions.But still the universally acceptable definition cannot be found.
According to A.H.Hasen"Public enterprises and operations of industrial,agricultural,financial and commercial undertakings.
According to World Bank "State owned enterprises are financially autonomous and legally distinct entities wholly or partially owned by Central or sub national government.

Concept of developing planning

The term economic planning was at first used by famous philosopher Plato in the book 'republic'. The importance of economic planing in the real sense was highlighted in an easy by a Norwegian theorist, Kristian Schonneyder.The modern from of planning had been originated from it.The planning had spread like wild fire after 2nd world war.Due to the worldwide spread of planning the development economist Arthur Lewis had remarked -"we are all planners now."
There is no consensus among economists regarding the concept or meaning of economic planning.It has been defined in many ways.Here the views of two planning exports have been presented.
According to Albert Waterston -"Planning is an organized,conscious and continual attempt to select the best available alternative to achieve specific goals.It involves the economising of scarce resources.
In the world of M.P.Todaro-"Economic planning is a deliberate governmental attempt to-coordinate economic decision making over the long run and to influence,direct and same case seven control the level and growth of a nation's principle economic variables,income,consumption,employment,saving,export,import,etc.in order to achieve a predetermined set of development objectives.
In sum,the formulation and execution of economic programmes to achieve national objective is called economic or development planning.The programmes and targets are fixed keeping in view the available resources.The economic planning is adopted to achieve the targets fixed within stipulated time.

Concept of government revenue

During 18th century under the influence of Adam Smith there was a strong view that the only function of government is also maintain internal law and order protect the country from foreign aggression.The activities of the government increased rapidly after second world war.In recent years the ghosts of Adam Smith has awakened.It is now through."That government is the best which does the least".But due to different reasons the role of government has not declined in importance in developing countries.The government has to play in importance role in providing social services such as education,health,nutrition,sanitation and economic services such as road,electricity,and communication.
The government needs adequate finance its activities.The government receives public revenue from various sources.Hence,how government receive income,what are the effects of public revenue,how the adverse effects,if any,can be removed are studies under public revenue.
The public revenue is an important part of public finance. According to economist Dalto,the terms public revenue has both narrow and wider meaning.In broad sense,public revenue includes all the income and receipt receive by the government.But in narrow sense,it includes only income receive from taxes.