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Economic Development and Growth

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Economic Development and Growth
Stages of Economic Growth: (Walt Rostow) 1. Traditional Society: economy dominated by subsistence activity where output is consumed by producers rather than traded. Agriculture is the most important industry. 2. Transitional Stage: through investment by developed countries into LDCs, a social climate emerges that encourages the pursuit of economic objectives. Banking and manufacturing begin at this point in addition to the emergence of a transport and communications infrastructure to support trade. 3. Take off: industrialisation increases with workers switching from the agricultural sector to the manufacturing sector. New industries emerge. Movement from rural to urban areas. 4. Drive to Maturity: long period of sustained economic progress and GNP continues to increase. Economy is diversifying into new areas. Technology improves. Less reliance on imports. 5. High Mass Consumption: increase in real income and the population enjoy an increased standard of living. Increased resources are devoted to social welfare and security.

Economic Development: is an increase in GNP per head of population, which is accompanied by a fundamental change in the structure of society.
Economic Growth: is an increase in GNP per head of population, without any changes in the structure of society.

Characteristics of LDCs: ➢ High rate of population growth: rates are very high, resulting in economic problems that are hard to solve by the government. ➢ Famine: results in disease, deaths at early age and high medical costs. ➢ Foreign debts: very high in LDCs. Capital and interest repayments use up significant government revenue and often cripple the economy. ➢ Uneven distribution of wealth: in some LDCs, a minority control a large part of the countries wealth, resulting in widespread poverty. ➢ Unfavourable…...

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