Requisites Of Economic Development Essay

Pre Requisites of Economic Development

Economic growth and development is not the result of any one factor. These depend upon various factors like, natural resources, stock of capital, manpower, technology, attitude of the people and political condition in the economy.

PRE-REQUISITES OF ECONOMIC DEVELOPMENT:

Pre-requisites are those conditions and factors, which are necessary for economic growth & development. Factors of development may be classified into two types:

I- Economic Factors and

II- Non-economic Factors

I- ECONOMIC FACTORS

Economic factors play very important role in the economic development of a country. Some major factors of economic developments are as follow:

1. Availability

b) More natural resources lead to more possibility of using labour force.

c) More natural resources refer more possibility of attaining self-sufficiency.

d) More natural resources cause more possibility of increase in per capita income.

Ø Situation in Pakistan:

Natural resources are available in the country but these are not utilized optimally. Contribution of natural resources to GDP is just 0.8 %. Forest area of Pakistan is 4.21 % of its total area. Land area for wild life is 11.3 %.

2. Capital Formation/Accumulation

Capital formation refers to the creation of capital. It is an increase in the stock of existing capital. Capital formation is an increasing function of saving. Accordingly more saving leads to more capital formation and vice versa.

Ø Role of Capital Accumulation:

a) Capital formation leads to reduction in poverty.

b) Capital formation results in more employment.

c) Due to capital formation there is growth and development of

Low capital formation rate is due to low investment, which is 16.6 % of GDP and low domestic saving which only 9.9 % of GDP.

3. Manpower or Efficient Labour

Manpower or labour means physical or mental effort or activity directed toward the production of goods and services. It is an important factor of production. According to classical economists, labour is the only variable factor of production. If in a country there is proper manpower planning and labour is efficient, literate and trained then there is more possibility of economic development.

Ø Labour Situation in Pakistan:

Labour force is 53.82 million of the total population in Pakistan. Annual value of productivity of labour in Pakistan is just $ 100 and it is $2500 in developed countries. Rate of unemployment is 5.5 %.

4. Energy and Power Resources

Power resources include coal, gas, oil and electricity etc. Today without use of power resources economic development is impossible. Energy and power resources play very important role in the economic development of a country.

Ø Situation in