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Economics of Growth and Development

Notes country is better for development. Thus, for economic growth, investment in human capital in
the form of educational and medical and such other social schemes is very much desirable.
According to Peter Drucker : “The most important requirement of rapid industrial growth is
people. People ready to welcome the challenge of economic change and opportunities in it.
People, above all, who are dedicated to the economic development of their country, and to
high standards of honesty, competency, knowledge and performance. What are needed beyond
all else are leadership and example, and that, only the right kind of people can provide”. Prof.
Drucker stressing the significance of human capital says further : “Capital without people is
sterile, but people can move mountains without capital. Development, therefore, requires
rapid growth of human talents and opportunities to employ them”.
5. Population Growth: Labour supply comes from population growth. But the population growth
should be normal. A galloping rise in population retards economic progress. Population
growth is desirable only in a under-populated country. It is, however, unwarranted in an
overpopulated country like India. In fact, a high population growth at the rate of 2.5 percent
per annum is very much detrimental to the economic growth of our country.
6. Social Overheads: 0000Another important determinant of economic growth is the provision
of social overheads like schools, colleges, technical institutions, medical colleges, hospitals
and public health facilities. Such facilities make the working population healthy, efficient and
responsible. Such people can well take their country economically forward.
7. Organisation: In the process of growth, organisation is very important. It is organization that
emphasises maximum use of the means of production in production. Orginisation is
complementary to capital and labour and helps production to reach the maximum level. In the
modern economic system, the entrepreneur performs the duty of an organiser and bears all
risks and uncertainties. Hence, entrepreneurship is an indispensable part in the process of
economic growth. For instance, the Industrial Revolution in England succeeded because of the
entrepreneurship.
Most of the underdeveloped countries in the world are poor not because there is shortage of
capital, weak infrastructure, unskilled labour and deficiency of natural resources, but because
of acute deficiency of entrepreneurship.
Myrdal rightly comments, “the Asian countries lack entrepreneurship not because they are
deficient in capital or raw materials but because they are deficient in persons with right
attitude for entrepreneurship”. Behind Japan’s rapid economic growth there is only one reason
that it has entrepreneurship in abundance. It is, therefore, essential in LDCs to create climate
for promoting entrepreneurship by emphasising education, new researches, and scientific and
technological developments. Apart from it, the state should also give priority to necessary
imports of machines, raw materials and equipments to provide facilities for wider markets,
and to allow tax rebates, special grants and loans to the new entrepreneurs for starting business
or industries particularly in the undeveloped areas of an economy.
8. Transformation of Traditional Agricultural Society: The transformation of traditional
agricultural society into a modern industrial society, i.e., structural changes lead to enhancement
of employment opportunities, higher labour productivity and the stock of capital, exploitation
of the newly developed resources and improved technology. Mostly, LDCs have a very large
primary sector and very small secondary and tertiary sectors. In such economies the structural
changes involve the transfer of population from the primary sector to the secondary and then
to tertiary sectors. Agriculture being the main occupation of the 70-80 percent population in
the LDCs passes through several structural changes. The number of dependents on agriculture
sector progressively reduce with the expansion of industrial or nonagricultural sector.
Similarly, the proportion of contribution of agriculture in the real national income also reduces
gradually. But net output in agriculture sector progressively increases in absolute terms, as it
is accompanied by a strong productivity movement, relating to the implementation of several

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