Determinants of Development

The process of development depends on a host of factors like natural resources, physical and human capital, technology, socio-politico-economic structure of the country. Determinants of development are broadly classified into economic factors and non-economic factors.

Economic Factors as determinants of Development

Economic factors as determinants of development include natural and human resources. Natural resources (those which are available as a free gift of nature) include land, water, minerals, fossil-fuel, forest products, wind and solar energy, etc. Natural resources can be broadly divided into three categories viz. Bioclimatic resources (land, water, forests and climatic environment), Fossil Fuel and non-fuel mineral resources.  The countries, which are rich in natural resources have more scope for high economic growth. Many of the western countries development is due to their abundant availability of natural resources. But there are a lots of exception to this. For example, many countries in Africa are rich in natural resources, but poor in development.

Human resources are also equally important. Few countries such as Japan are poor in natural resources but their human resources have turned those countries into epitome of success.

Human resources are a prerequisite for development of a country. A country devoid of human resources cannot progress even if it is abundant with natural resources. Human resource can be divided into two categories viz. Physical labour and Human skill. Physical labour is the labour supply and skill is the knowledge embodied in humans. Human skill is formed when investment is made into education, health, training etc.

Non-economic Factors

Non-economic factors refer to socio-political factors or even religious factors. Political environment directly influences the economic development. Stable political administration generates faith of the people in the programmes and policies of the government. Accordingly, people venture to make investment in diverse areas of economic activity. Social institutions like caste system, joint family system and laws of inheritance play an important role in economic development. A corruption-free system is certainly more conducive to the process of growth and development, than the one where corruption is present.

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