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Different Definitions of Economic Development

There are a large number of definitions given by different economists. These are as follows:

Prof. W. Elkan says,

“Economic development means a process which makes people, in general better off by increasing their command over goods and services and by increasing the choice open to them.”

This definition does not clearly spell out the meaning of development.

Prof. Kindle Berger defines

“Economic development implies both more output and changes in the technical and institutional arrangements by which it is produced and distributed.”

This definition highlights production and distribution of output, but does not give the process used for it.

Prof. Friedman defines development as

“An innovative process leading to the structural transformation of social systems.”

According to this definition, structural change in social system is required for development, whereas it should have emphasised structural change in the economy.

Prof. W. F. Williamson says,

“Economic Development is a process whereby the people of a country utilize the available resources in such a way that the per capita income of the country increases”.

This definition requires an increase in per capita income for development, but it ignores the distribution of income in a society.

Prof. Paul Alpert says,

“Economic development is the process through which a country increases its national income by utilizing the productive resources within the country.”

This definition also ignores the distribution of income in the country as a pre-requisite for development.

Prof. Watson,

“Economic Development shows the excess of consumption and production of a country as compared with increase in population. This increase in production is due to better combination and increase in the productivity of the factors of production”.

Prof. Higgins

“Economic Development is the increase in per capita and National Income of a country”.

Prof. Arthur Lewis,

“Economic Development represents the per capita increase in the production of a country”.

In the literature on economic development the most comprehensive definition is given by Meier and Baldwin.

Meier and Baldwin defined economic development as

“Economic Development is the process whereby an economy’s real national income increases over a long period of time, and if the rate of development is greater than the rate of growth of population, then per capita real income will increase.

It is expressed Mathematically as:

If Y/P represents real national income (NI) and P represents population, then economic development will take place if d(Y/P)/dt > 0.

In case d(Y/P)/dt = dP/dt , it would represent economic stagnation.

While if d(Y/P)/dt < dP/dt or dP/dt > d(Y/P)/dt , it will represent backwardness.

This definition of economic development consists of five important points i.e.

  1. A process
  2. Increase in real National Income
  3. Growth rate of population
  4. Increase in per capita income.
  5. Long period of time,


Economic development is a process through which a country utilizes its resources in a better way, valuable changes appear during this process, which result in a growth in real national income and per capita income. Normally these changes are of two types

a) Changes in the supply of inputs.

b) Changes in the demand for goods and services.

a) Changes in the Supply of Inputs:

During the process of economic development, inputs are implied to be used in a better way, sophisticated techniques of production are found, all the valuable resources are utilized to have better results for growth in real per capita income.

Changes in the supply of inputs include the following:

  • Supply of natural resources e.g. gas, petrol, coal and iron etc.
  • Capital accumulation, that is growth in the supply of capital goods e.g. growth in industry, roads, rails, bridges etc.
  • Use of sophisticated techniques of production.
  • Growth in the supply of labour.
  • By acting on new techniques of production and producing on the line of job specialization, production cost is reduced, which results in high rates of profit and causes an increase in real per capita income. Increase in real per capita income causes high consumption and high saving and more investment, which promotes the process of economic development.

b) Changes in Demand for Goods and Services:

These changes are of following types:

  • Changes in level of production and distribution.
  • Changes in population according to age.
  • Changes in tastes and fashions.
  • Changes in administrative structure of production sector.

During the process of economic development an increase in real national income of a country will lead to the stage of equal distribution of income along with the distribution of basic needs


During the process of economic development real national income increases, which is the basic objective of this process. Due to increase in national income. per capita income also increases; which causes high consumption and better living standard. Thus, it would be suffice to say that target of economic development achieved. It is because of continuous increase in real national income.


Due to the availability of basic health facilities, death rate decreases, which causes an increase in population. If the rate of economic growth of growth rate of real G.N.P. is greater than the rate of growth of population, per capita income increase and hence there will be development in real sense.


Increase in real per capita income is essential for economic development. If a country s real per capita income increases for a long time then the country moves towards economic development.


Process of economic development requires a long period of time. This period consists of twenty years or more because during the process whole of the infrastructure of the economy is changed. Thus, economic development is a long period process.

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