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Table of Contents

  1. Topic pack - Development economics - introduction
  2. 4.1 Economic development (notes)
    1. Economic development - introduction
    2. Development - pause for thought
    3. Economic growth and economic development
    4. Sustainability
    5. The sources of economic growth and economic development
    6. Natural factors
    7. Importance of agriculture
    8. Externalities
    9. Case study - farming in Kenya
    10. Human factors
    11. Population
    12. Physical capital and technological factors
    13. Institutional factors
    14. The consequences of growth for Development
    15. Common characteristics of economically less developed countries
    16. Poverty cycle
    17. Diversity among economically less developed nations
    18. International development goals
    19. Millennium Development Goals
    20. Case Study - Millennium Development Goals
  3. 4.1 Economic development (questions)
  4. 4.2 Measuring Economic Development (notes)
  5. 4.2 Measuring development (questions)
  6. 4.3 The role of domestic factors in economic development (notes)
  7. 4.3 The role of domestic factors in economic development (questions)
  8. 4.4 The role of international trade (notes)
  9. 4.4 The role of international trade (questions)
  10. 4.5 The role of Foreign Direct Investment (FDI) (notes)
  11. 4.5 The role of foreign direct investment (questions)
  12. 4.6 The role of foreign aid and multilaterial development assistance (notes)
  13. 4.6 The role of foreign aid and multilateral development assistance (questions)
  14. 4.7 The role of international debt (notes)
  15. 4.7 The role of international debt (questions)
  16. 4.8 The balance between markets and intervention (notes)
  17. 4.8 The balance between markets and intervention (questions)
  18. Print View

The sources of economic growth and economic development

Syllabus: Explain that the most important sources of economic growth in economically less developed countries include:
  • increases in quantities of physical capital and human capital,
  • the development and use of new technologies that are appropriate to the conditions of the economically less developed countries, and
  •  institutional changes.

S:\triplea_resources\DP_topic_packs\business management\student_packs\articulate_interactions\images\progress_bars.jpg There are four basic requirements, which are:

  • Natural resources - land, minerals, fuels, climate; their quantity and quality.
  • Human resources - the supply of labour and the quality of labour.
  • Physical capital and technological factors - machines, factories, roads; their quantity and quality.
  • Institutional factors - which may include the banking system, the legal system and important factors like a good health care system. We look at this in more detail in Section 4.3.

Economic growth is caused by improvements in the quantity and quality of the factors of production, i.e.

  • land,
  • labour,
  • capital
  • entrepreneurs.

Conversely, economic decline may occur if the quantity and quality of any of the factors of production falls. In this section we look at approaches that developing countries could take to improve the quantity and quality of factors of production. We consider the following topics in detail:

  • Natural factors
  • Human factors
  • Physical capital and technological factors
  • Institutional factors