Determinants OR Factors Influencing Economic Development

There are two types of Determinants OR Factors Influencing Economic Development -

1. Economical Factors and
2. Non Economical Factors

Economical Factors

S No	HEADINGS	EXPLANATIONS
1	SIZE OF MARKET	Development can be nourished if expanded market exists where goods and services used to generates profits for investors. A wide market also provides adequate division of labour and specialisation. Large division of labour and specialisation leads to high production which ultimately turned towards development of an economy.
2	Human Resources	Human resources can be classified into a)         Physical Labour - refer to the manpower and labour force and includes number of workers and no. of hour work . b)         Human skill - refers to humans skills and includes Innovation of ideas, education  and training to labours, good health etc.
3	Economic agencies	•              Economic agencies are responsible for encouraging the savings and investments in an economy. •              It includes banks, financial institutions etc.

4	Physical capital resources                         and capital formation	It means “self produced means of production”. It does not includes gifts from nature rather it is manmade and further used in production of goods and services. Eg    machines,    stocks,    raw    materials,        equipments                 factory building etc. Hence more physical capital means more developments in an economy.
5	Natural resources	Natural resources include the gifts from nature i.e water, land, forests, petroleum, etc. Availability of natural resources has key impact over development of an economy for eg the key success of Arab emirates is petroleum source.
6	Technical progress	Technical progress and innovation are significant determinants of development of an economy even when factors of production are constant. According to Lipsey technical progress is brought about by innovation through introducing new products, new ways of producing existing products.
7	Other factors	Other factors includes FDI, economic planning and technology transfer from advanced countries.

Non Economical Factors

S No	HEADINGS	EXPLANATIONS
1	Social Change	Social change hereby means required changes in social institution and caste system, religion and joint family system because their participation in economic development is highly essential.
2	Freedom            from corruption	Less developed countries has suffered from corruption in almost every significant aspects for eg massive tax evasion has lead towards adverse effect on industrial development.
3	Political environment	•          Economic development is mostly influenced by the political environment of an economy. Development of a country is somehow concerns  with the political  environment  of an underdeveloped country. •          eg during british raj England supported by freedom of political environment and whereas indian economy had suffered under british rule. •          Stability in political environment is also required to develop as a stable political environment is responsible for formation of programmes and policies to run economy efficiently.

4	Aspiration                              of development	According to Prof Richard Gill economical development are not a mechanical process or not a summation of various favourable elements rather it is indeed a human effort. Peoples  who  believe  in  their  fate  are  responsible  for  their poverty himself.
5	Coping                          with Random variation	Coping with random variation is an essential to development of an economy, for eg using natural coal and petroleum will be resulted in non existence of such resources in future and also leads to decline in income and growth however finding an alternative way like solar energy in place of petrol can control such random variation.

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