Question

5. In defining development to include more than just the growth of per capita income, there is an implicit assumption that the growth of per capita income alone is not sufficient to guarantee the reduction of poverty and the growth of self- esteem. Is it possible that there could be growth of per capita income without the achievement of these other objectives? 6. Explain (provide an economic intuition) how the following characteristics that are common to developing countries affect economic development. a) Lower standard of living and productivity b) High population growth rates c) Social fragmentation d) Low industrialization e) Adverse geography

Answer 1

5)

The growth rate per capita is considered as parameter to measure the living standard of any country. High per capita growth implies that economy is performing well. But in actual sense, we should not jump to the quick conclusion. The high per capita growth does not necessarily leads to the reduction of poverty. The rise in income inequalities would not help to address the problem of poverty.

Further high per capita growth accompanied by the degradation of environment would not serve the purpose. It would deteriorate the living standards of people.

Further high growth might be funding the military purposes that will also not level up the welfare of people. Thus per capita income or growth is not right measure.