DevelopmentDevelopmentEconomicsEconomics

Outline of the Lecture:Outline of the Lecture:

Per Capita Income,

Causes of Low Per Capita Income,

Measure to Increase Per Capita Income

Per Capita Income,

Causes of Low Per Capita Income,

Measure to Increase Per Capita Income

Per Capita Income:Per Capita Income:

Per capita income is the average income per head of a country.

Per capita income is obtained by dividing national income of a country by its population in the year.

Per capita income = national income in a year population in the year

Per capita income is the average income per head of a country.

Per capita income is obtained by dividing national income of a country by its population in the year.

Per capita income = national income in a year population in the year

The concept of per capita income is used as an indicator to

measure economic development of a country. If the real per

capita income of a country is high, it would indicate that

the country is a developed country and vice versa.

The higher growth rate of real per capita income in a

country indicates that the country is developing fast.

The concept of per capita income is used as an indicator to

measure economic development of a country. If the real per

capita income of a country is high, it would indicate that

the country is a developed country and vice versa.

The higher growth rate of real per capita income in a

country indicates that the country is developing fast.

Per capita income…. continuedPer capita income…. continued

Conversely, if the growth rate of real per capita income is

low, it would mean that economic policies of the

government are failing.

World Bank compares the economic condition of the

different countries by comparing their real per capita

income. This determines which part of the world is rich and

which is poor.

Conversely, if the growth rate of real per capita income is

low, it would mean that economic policies of the

government are failing.

World Bank compares the economic condition of the

different countries by comparing their real per capita

income. This determines which part of the world is rich and

which is poor.

Per capita income…. continuedPer capita income…. continued

Causes of Low Per Capita Income:Causes of Low Per Capita Income:

The various causes of low per capita income of the LDCs can be categorized in the following two group:

1. National Income side causes

2. Population side causes

Causes of Low Per Capita Income…. continuedCauses of Low Per Capita Income…. continued

1. National Income Side Cause:a. Shortage of natural resourcesb. Backwardness of agriculture sectorc. Industrial backwardnessd. Limited savings and investmente. Unfavorable balance of tradef. Shortage of technical handsg. Problem of unemploymenth. Low labor efficiencyi. Inadequate transport and communication facilitiesj. Absence of innovative capabilitiesk. Social customs and traditionsl. Political instability m. Corrupt bureaucracy

2. Population Side Cause:a. Population birth rate is highb. Drop in death ratec. Early marriagesd. Tropical climatee. Polygamyf. illiteracyg. More children are considered as source of powerh. Belief that God is Raziqi. Joint-family systemj. Absence of recreational facilitiesk. Resistance to population control drives

Causes of Low Per Capita Income…. continuedCauses of Low Per Capita Income…. continued

Measures to increase Per Capita Income:Measures to increase Per Capita Income:

a. Full utilization of the natural resourcesb. Agricultural developmentc. Industrial developmentd. Capital formatione. Technical educationf. Control populationg. Creating Employment opportunitiesh. Political stabilityi. Infra-structure facilitiesj. Patriotism