Economic Development

Economic development refers to the shift from low living standards toward high living standards. In other words, when education, healthcare, and standards of lifestyle improve, the country is said to achieve development. However, the term development can also mean personal development which means acquiring better educational qualifications and living a better quality of life.

What Development Promises - Different People's Different Goals

The goals of development are different for different people. People of different groups in society have different requirements and hence development promises different goals for them. For some people, such as students, having better educational qualifications is development while for businesspeople having prosperity through business is development. In this way, different socio-cultural and economic strata have different goals of development.

Although development has different meanings for different people, the overall development of an economy is measured collectively. So, for economic development, all measurable developmental factors should improve. In simpler words, although individual development means different goals for different people the overall economic development is a collective and cumulative growth of developmental factors.

Income and Other Goals

People may have different development goals but income is one of the most common goals of every individual. Usually, all people want to increase their income with the available resources they have in their hands. Income is a major factor in economic development and countries with higher income are considered to have more development than countries that have low income. Income is also directly related to lifestyle and hence to improve lifestyle the income must be at a certain level. Therefore, good income is one of the major goals for development.

However, income is not the only goal that individuals seek to attain for development. Non-material objects, such as respect, peace of mind, and love are some other objects people seek when they want to develop. People also want to live in a pollution-free, noise-free, and hostility-free environment. So, these are also major requirements for development for some people.

National Development

National development refers to the capacity of a country to raise the standards of living of its citizens. To have a holistic national development, a country must provide basic requirements, such as good food, better attires, and good housing apart from other objects such as employment and good transportation, sanitation, and pollution-free and peaceful environments.

National development also refers to sustained economic growth and continued development in all economic aspects in overall terms. To achieve national development, people’s income should also increase. Without a good income, a nation cannot attain holistic national development. Good literacy levels, enough access to healthcare, and provisions of public service are also basic requirements for good national development.

The components of national development are −

  • The level of rural development or development of rural locations.
  • Increasing agricultural products or an increased level of agricultural output.
  • Expansion of economic know-how.
  • Management of economic growth in urban locations of the nation.
  • Contraction of poverty.

National development is often represented by the nation’s per capita income, increased literacy level, healthcare improvement, and overall improvement of the components of national development mentioned above.

How to Compare Development of Different Countries?

To compare the development of different countries, many social, political, and economic indicators are used. Some of these indicators are Gross Domestic Product (GDP), Per Capita Income, Human Development Index, etc.

Gross Domestic Product (GDP) − It is the number of final goods produced within the borders of a country in a given financial year. It considers the total output of the production of a country.

Per capita income − It is the average income of a person in a country. It is used to compare the comparable income of individuals from different countries. India falls in the category of low-middle-income countries, as the per capita income of India was $1820 per annum as of 2017.

Human Development Index (HDI) − The Human Development Index Report is published by the United Nations Development Programme (UNDP).

Human Development Report compares the position of different countries based on −

  • Education levels of residents
  • Per Capita Income
  • Health Status

Focus on Other Criteria Than Income − The per capita income of a country or a state within a country is not the sole criteria for development. Because the income of a person may not afford all the goods and services that he needs to live a good life.

To compare countries and states, we have to look at other variables also such as Infant mortality rate, literacy rate, sex ratio, maternal mortality rate, life expectancy, etc.

For example, if we only consider per capita income for development, then while comparing the Indian States Punjab, Kerala, and Bihar, we see Punjab should be the most developed State out of them.

States Per Capita Income (Rs)
Punjab 26,000
Kerala 22,800
Bihar 5,700

But if considering the other variables, the most developed State is Kerala instead.

States Infant mortality rate per 1000 (2003) Literacy Rate (%) 2001 Met attendance ratio from class 1 to 5 (1995-96)
Punjab 49 70 81
Kerala 11 91 91
Bihar 60 47 41

Public Facilities

Public facilities are considered key aspects for development. The most common public facilities include the following −

  • Basic Education − Government provides the schools and allied facilities, such as playground, furniture of the school, etc.
  • Basic Health Facilities − Government provides basic health facilities, such as hospitals, and vaccine programs to maintain a good quality of life.
  • Law and Order Facility/Security − Police outposts and police stations are managed by governments for maintaining the security of the public and protecting the security and safety of its citizens.
  • Public Distribution System − Government opens Targeted Public Distribution System (TPDS) shops or ration shops to provide basic food items like rice grain, wheat, pulses, etc. which are distributed at a subsidized rate to poor people.

The functioning of these facilities depends on public cooperation and community awareness.

Sustainable Development

The definition of development offered by the famous World Commission on Environment and Development in its report Our Common Future is “Sustainable development is the development that meets the needs of the present without compromising the ability of future generations to meet their own needs".

In economics, sustainable development means an economic process in which the quantity and quality of our stocks of natural resources (for example, forests) and the integrity of biogeochemical cycles (like climate) are sustained and passed on to future generations unimpaired.

In other words, there is no depreciation in the world's "natural capital", according to financial accounting.


Development, especially national development is a buzzword in economics because it is a central idea of the whole economic application process in a country. The aim of economics and all other fields of study is to bring development to the forefront of progress, and hence, development becomes a crucial concept for economists from around the globe.

The development of human resources is also very important because it shows the individual development of the people of an economy. As is obvious, development is a process that contains progress and enhancement of basic needs for societies which makes it a very important concept for individuals as well as nations. The concept will remain central to economics whatever the condition of an economy because improvements must be made on this front if a progressive economy is required.


Q1. Is income the only criterion for development?

Ans. Although income is very important; it is not the only criterion for development. Other factors, such as mortality rate, basic education, healthcare, etc. must also be used to compare development.

Q2. Who is responsible for providing public services?

Ans. The government is responsible for providing public services to the citizens.

Q3. Name a factor other than GDP that is used for comparing development.

Ans. Human Development Index (HDI) is also used to compare the development of a nation.

Updated on: 13-Oct-2022


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