Which among the following signs denote that a particular country is undergoing “Economic Development”?
1. Changing structure of GDP in favour of industry
2. Institutional changes in an economy
3. Larger Capital Inflows
4. Larger share of service industry in GDP
Choose the correct option from the codes given below:
Economic development refers to the process by which along with the increase in real per capita income, there is a reduction in inequality, poverty, illiteracy and disease. This implies that there is an improvement in the economic welfare of the masses and their standard of living rises. The elements of the Economic Development suggest four main elements of the concept of Economic Development.
- Rise in Real Per Capita Income
- Long Run process
- Increase in welfare
- Structural, Institutional and Technical Changes.
The last one is very important. The Economic Development must bring some notable changes in the structural, institutional and technical set up. For example a shift from the dominance of primary sector to that of the secondary and tertiary sector is one of the important structural changes. Then, the change from labour intensive to capital intensive technology is a technological change. The shift in the ownership of land from the absentee landlords to actual tillers is institutional change.
The correct answer of this question is Capital Inflows. This is because Capital Inflows can not always denote that the economic development is going on. The foreign capital inflows replace the domestic savings and thus do not necessarily enhance the growth and development since foreign capital inflows would increase the investment payments aborad that detracts their capital inflows.
This question is a part of GKToday's Integrated IAS General Studies Module