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“Economic development usually refers to the adoption of new technologies, transition from agriculture-based to industry-based economy, and general improvement in living standards.” At one time it was believed as proposed by Malthus in his supposition known as Malthusian catastrophe that within a few centuries the mushrooming population of the world would consume all the food resources, and would reduce humanity to the brink of starvation. But the Malthusian catastrophe failed. All countries, excepting, a few have shown a significant development and transformation in the fields of producing means of sustenance, utilizing resources, creating employment and increasing the per capita income. To show how economic development has coped with the crisis of great depression and recession from time to time, I would like to follow “Ruston’s and Jeffrey Sachs’” models particular with reference to the development of economies in Britain and India-a place where I am studying and where I initially belong to, respectively.
In his 2008 book Common Wealth, economist “Jeffrey Sachs” postulates that an “impoverished country moves up from one stage to the next just like a person climbing up the rungs of a ladder, gradually achieving more and more prosperity.” The journey begins from the initial stage called a “subsistence economy” wherein the farmers play the pivotal role in transforming the economy of the country. All the economies of the world were more or less agricultural economies at one period of time. The economy is called subsistence in that at this turn virtually a farmer can hardly grow sufficient food for his survival despite his utmost efforts at it. The economy is marred by the fact that the country usually has very low literacy rates, outdated means of cultivation. Poor transportation, short life expectancy, high infant mortality rates and widespread hunger.
With the passage of time and scientific techniques being used by the farmers, there comes a stage when the farmer can excel in agricultural productivity. For Britain and India this stage is the age of “Industrial revolution”, and the economy transforms from the subsistence one to the commercial one. The main feature that can be attributed behind this development is the development in scientific technology. Tractors and other agricultural implements helped the farmers to produce more in shorter time. The steam engines accelerated transportation, and the farmers started getting a handy and fair price for their produce. Leaving the traditional crops behind the farmers grew cotton. The rise on productivity also increased demand for labor and as a result workers and laborers were paid more. Thus it was a time that revolutionized and marked the beginning of the economic development of these two countries. It was here that the farmer could produce a surplus and improved his income through his hard work manifested in the additional crop production.
With a surplus at hand and health facilities improving, farmers grew healthier. Not having to spend money on the diseases and rapidly erupting epidemics, the farmers were able to afford higher education for their children, who in turn became skilled farmers and businessman. With this boom there is found a dramatic change in transportation as a result of better roads and ports- a fact that makes the economy launch imports and exports. This stage can be marked as an “emerging market economy.”
Better health, better means of transportation, scientific harvesting, education and imports and exports are certainly exemplary in boosting the economy of a country. It gives rise to the age of technology. People are skilled in all the fields and dimensions-be it computers, scientific research or engineering. Highways, runways, the network of railways, the use of satellites, wireless communication proves very conducive to the economy, and the economy blooms. Foreign investment and international trade rises, the term “multinational” “global” replaces the national and indigenous, and the economy soon becomes prospering. The initial boost in wealth is like a seed, which, once planted, is able to be self-sustaining and grow into a mighty tree on its own.
Since India had long been colonized by Britain, there were widespread effects on its economy. The colonizers were more concerned about their profits even at the cost of exploiting the other nations. But after the World War II India was declared independent. The result is evident. Indian economy is still developing while that of Britain is developed.
ECONOMIC DEVELOPMENT IN BRITAIN
The graph above shows that the economy of Britain has also undergone rise and fall from the years 1979 to 2012. But the graph is most significant in showing that the economy took a boos from the year 2009 where it was it its ever lowest.
As per Reuters, April 3, 2014, “Britain’s dominant services sector expanded steadily in March, pointing to solid economic growth in the first quarter, even though the rate of expansion was the slowest since last June and hiring eased, a survey showed on Thursday.” The index is stable considerably above 50 marks that denote a tremendous rise in growth and development of the UK economy. It also indicates that the UK economy is rising in the service sector- a fact that can be attributed to almost 75% of the British economy. The service sector also includes major banking institutions and high-class hotels and restaurants. If the service sector is added to the PMIs for manufacturing, building and construction, it can be seen that the index has fallen down to almost 58.1 compared to the composite index of 58.6 last year. The change is very significant and eases optimism as the composite index is at its lowest now.
In the words of Williamson, Markit’s Chief Economist, a survey conducted by him showed that “The drop in price pressures alongside the more moderate pace of growth takes pressure off the Bank of England to start tightening policy, which should in turn take some pressure off sterling.” This growth exempts the Bank of England from increasing the rate of interest as the event marks a fall in inflations as well, which is measured to be less than 2% of the British target in the last 5 years. It is also expected by the report of Williamson’s that the composite of manufacturing, services and construction sectors is further supposed to witness a bloom. They are expanding at a very strong rate suggesting at least 0.7% growth in the economy.
ECONOMIC DEVELOPMENT IN INDIA
Although at the time of freedom the Indian economy was very weak, there can be seen temporal growth in the Indian economy. The British left India after dividing the country into India and Pakistan, and it is natural that it took decades for the country to overcome this backlash. But the agricultural Indian economy also rose under the reforms as brought about by the Indian governments subsequently, and also under the influence of Green revolution. As the farmers helped economy to prosper, there has been seen a demand in education the government has promoted foreign investment in India. Many reform launched by economists such as Man Mohan Singh and Amartya Sen proved vital and it gave a boost to the Indian economy.
As per “The Hindu”, March 3, 2014, a survey conducted by the HSBC, “India’s manufacturing sector expanded in February at the strongest pace in 12 months, driven largely by growth in new business orders and an improved macroeconomic situation.” Unlike the UK inflation has been a serious problem in the Indian economy and as a result the Reserve Bank of India raised the key policy rate by 0.25 per cent to 8 in its bid to control inflation. Macintosh HD:Users:rahulgautam:Desktop:g_essay_web.jpg
There has been a tremendous growth in the Indian manufacturing sector also. The graph above shows clearly how the period ending 1981-2013 is an indicator of the growth of Indian economy over the years. In a survey undertaken by The Hindu, it is expected that “improved economic performance may help generate about 3.2 million additional jobs.” The year 2014 may be a further turning point in Indian economy as election have been scheduled all over the country. The political parties are coming up with different agendas and propagandas. As per the economists, this even may mark “The revival of manufacturing sector through greater emphasis on infrastructure development and by rationalization of labor laws.” Another survey conducted by Manpower Group indicates, “India has emerged as the most optimistic nation in terms of hiring plans and sectors such as aviation, IT & ITeS.”
Since India and Britain share history between them during colonization, and foreign trade after Indian independence, there is seen a mutual growth in their respective economies. The graph below shows how there has been an increasing trend in the imports and exports of the two countries.