Question

What are the non-economic factors determining development?

Answer 1

1. Human Resource
2. Technical Know-how
3. Political Freedom
4. Social Organization
5. Corruption free administration
6. Desire for Development
7. Moral, ethical and social values
8. Casino Capitalism
9. Patrimonial Capitalism

(1) Human Resources:

• Human resource is named human capital because of its power to increase productivity and thereby national income.
• There is a circular relationship between human development and economic growth.
• A healthy, educated and skilled labour force is the most important productive asset.
• Human capital formation is the process of increasing knowledge, skills, and the productive capacity of people.

(2) Technical Know-how:

• As scientific and technological knowledge advances, more and more sophisticated techniques steadily raise the productivity levels in all sectors.

(3) Political Freedom:

• The process of development is linked with political freedom.

(4) Social Organization:

• People show interest in the development activity only when they feel that the fruits of development will be fairly distributed.

(5) Corruption free administration:

• Corruption is a negative factor in the growth process.
• Unless the countries root-out corruption in their administrative system, the crony capitalists and traders will continue to exploit national resources.

(6) The desire for development:

• The pace of economic growth in any country depends to a great extent on people’s desire for development.

(7) Moral, ethical and social values:

• These determine the efficiency of the market, according to Douglas C. North.
• If people are not honest, a market cannot function.

(8) Casino Capitalism:

• If People spend a larger proportion of their income and time on entertainment liquor and other illegal activities, productive activities may suffer, according to Thomas Piketty.

(9) Patrimonial Capitalism:

• If the assets are simply passed on to children from their parents, the children would not work hard, because the children do not know the value of the assets.