Economic growth and Development

What is Economic development?

It is not easy to give a clear and precise definition of economic development. The term
development means different things to different people. Before 1970s the traditional measure
of the economic development was the rise in the real national income and per capita income of
the country.

Definition:
In the words of Mair and Baldwin, economic development is the process
whereby an economys real national income increase 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.
In 1980s the real income and real per capita income as the measure of economic development
was discarded. The problem of wide spread poverty, unemployment and unequal distribution of
income came to the forefront. The term economic development was redefined in term of the
reduction of poverty, inequality of income and unemployment. The common slogan of economic
development was the redistribution of income.

Objectives of Development:
The main objectives of the economic development are as follows:
1) Provision of Basic Needs:
The primary objective of the economic development is the
provision and expansion of the basic human needs such as food, clothing, shelter, health
and protection.
2) Raising Level of Living:
Another important objective of development is to raise the level
of living of the people by providing them higher income, more jobs, better education,
greater freedom and self-respect.
3) Expanding the range of economic and social choices:

The development must include

the increase in the range of human choices. People should have the freedom to choose
greater leisure, political freedom and equality of opportunity.

What is Economic growth?

The meaning and importance of economic growth is a vital issue in economics. Economic
growth is often defined as the continuous increase in the real value of production of goods
and services. But In other words the Michael Todaro, economic growth is a steady
process by which the productive capacity of the economy is increased overtime to bring
about rising level of outputs and income.

Elements of Economic Growth:

The following are the four major elements of the economic growth:
1) Long term Process:
Economic growth is a long run process involving a period of decades.
A short term increase in national income for few year is not considered an economic
growth.
2) Rise in Real Per Capita Income:
Economic growth is accompanied by the substantial
rise in real per capita income. This can be possible is the real growth in income is higher
than the rate of growth of population over a long period of time.
3) Rise in Productivity:
Economic growth is always associated with the substantial rise in
the productive capacity of the economy. The rise in the real output can be achieved by
proper utilization of natural and human resources and better techniques of production in
all sectors of the economy.
4) Greater Equality:
There should be the greater equality in the distribution of income and
reduction of unemployment in the country.

Agriculture Sector
Importance of Agriculture Sector in the Economic Development:
The agriculture sector of Pakistan is mainly divided into four main sub sectors.
1) Crops.
2) Fisheries.

3) Livestock.
4) Forestry.
About fifty years back it was neglected in the both developed and underdeveloped countries.it
was regarded as residual reservoir of labor for employment in industry. In 1960s the importance
of agriculture was realized and adequate attention was given to this sector.

Land Used:
Pakistan is basically a farming community. About 62% of its
population is living in rural areas and about 60% of them are engaged in farming, livestock and
agro-based industries.
The total area of Pakistan is approx. 80 million hectares (79.6 million hectares) of which 27.7%
is cultivated area, 10.4% is culturable wastes and 5.36% is under the forests. The remaining 57%
of area consists of deserts, mountains, and is not used for agricultural and forestry purposes.

Role of agriculture development in an economic development:

Agriculture sector is the dominant sector of the Pakistans economy. Agriculture contributes
20.9% to GDP, employs 43.5% of countrys workforce and contributes more than 66% to export
earnings. The specific contributions of agriculture in the economy of Pakistan are as under:
1) It Provide Food and Fiber:
The key contribution of agriculture is that it provides the
food (wheat, rice etc.) and fiber (cotton, jute etc.) to the growing population of Pakistan.
If a developing country whose economy is based on agriculture fails to meet its food and
fiber requirements than it has an adverse effect on the economy. The direct effect of the
shortage of the food and the prices will be immediately increased.
2) Transfer the Surplus Labor:
In Pakistan 44% of the labor force is employed in
agriculture sector. With the growth in the agriculture sector due to the improved use of inputs
(fertilizer, better seeds, water availability machinery etc.). The agriculture surplus labor is
absorbed in small and large scale industries.

3) Provision of Capital:
It provides the capita to the state for meeting the requirement of
economic development such as the construction of factories, building of infrastructure.
a) Tax on agriculture Income:
It generates the capital by levying tax on the income of the
farmers.
b) Purchase of agriculture commodities:
The government sometimes purchases the
commodities at the lower prices compared to the industrial goods. It then sells them at
higher prices in the domestic as well as in the foreign market. The difference in prices is
secure of development purposes.
c) Direct capital formation within the agriculture sector:
The government also raises
capital from agriculture by stimulating direct capital within the agriculture sector by
itself.
d) Promoting Rural Savings:
Another mean of securing capital from agriculture is to
encourage farmers to deposit their savings in banks. The amount thus is used for
development of farms and non-farms sectors.
4) Source of Foreign Exchange Earning:
The well-developed agriculture sector is also a
major source of earning foreign exchange for country. The trade surplus not only helps in
paying the external debts but also pay capital to buy seeds, machinery etc.
5) Expansion in domestic demand:
As the agriculture productivity increases the income of
the farmers goes up. With the rise in income there is also an expansion in domestic
demands for consumer goods.
6) Impact on Rural Welfare:

If the productivity of the agriculture is increased; It decreases

the poverty, increased consumption of consumer goods and better standard of living for
the people of rural areas.

Agriculture Production & Its Problems:

Agriculture is the backbone of our
economic system. It contributes 21% to GDP and employs about 44% to total labor force.
We thus find the agriculture has a special role to play in the economic development of our
country.

Causes of Low Productivity:

The following are the three factors of low productivity of agriculture. Moreover these
factors are classified further.
1) General Factors:
(1)(A)
Overcrowding in Agriculture:
About 60.8% of population belongs from the rural
areas is mainly depending on the agriculture for its livelihood. Due to over crowdedness, the
area of cultivated land per cultivator is declined. So the improved techniques cannot be
applied satisfactory.
(1)(B) Socio-economic Factor:
The farmers illiteracy, conservative outlooks also stands in the
way of using the improved technology for increasing the productivity of land.
(1)(C) Natural Factors:
If there is no attack of pests, no hail storm, timely rain so the
productivity will be plenty full. In short agriculture is a gamble of rain.
(1)(D) Lack of Inadequate finance:
Due to the inadequate supply of loans from the institutional
sources, the farmers are mostly not able to purchase the modern inputs of agriculture in time. The
Zarai taraqiati bank limited is formerly called as the agriculture development bank of Pakistan.