Ecnomic Growth

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------------------------------------------------- Chapter 1 - Economy of Pakistan ------------------------------------------------- Economic Development ------------------------------------------------- Definition of Economic Development Economic development is a process of economic transition involving structural transformation of an economy through industrialization, raising gross national product and per capital income. According to Lewis, Economic development means increase in output per head. According to Micheal Todaro, Economic development must be conceived of as a multi-dimensional process involving major changes in social structures, people 's attitudes, national institutions, acceleration of economic growth and…show more content…
It also contributes to the provision of a greater quantity of social goods and services such as health and education, thereby improving real standard of living of the people. Govt. can stimulate growth process by increasing current spending in the economy through tax cuts by Fiscal policy and by increasing money supply and reducing interest rates by adopting Monetary policy. ------------------------------------------------- Economic Factors Needed For Economic Development 1. Natural Resources Natural resources are one of the three main factors of production the other two are labor and capital. Natural resources include area of land, forests, rivers, climate and mines. If a country is rich in better quality of all natural resources, it will develop economically at a fast speed. 2. Capital Formation It is the process of adding net physical capital stock of an economy. Capital formation creates productive potential for future production. Capital formation has three stages namely * savings * financial institutions and capital market for mobilization of savings * act of investment in machinery and buildings. 3. Specialization Output is greater as a result of specialization. Specialization enables an economy to use its scarce resources more efficiently, thereby producing larger volume of goods and services. It increases the rate of economic development of a country. 4. Technology Inventions and innovations reduce manufacturing and
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