Economic Development In Canada Essay

Various developed countries like Japan have been able to attain higher rate of capital formation to trigger rapid economic growth.

Hicks opined, “Economic Development deals with the problem of underdeveloped countries whereas ‘Economic Growth’ deals with the problem of developed countries.

Changes arising on the demand side are mostly related to consumers, tastes and preferences, distribution of income, size and composition of country’s population, and other organisational and institutional changes.

Moreover, Easterlin argued that population pressure may favourably affect individual motivation and this may again lead to changes in production techniques.

Thus whether growing population in a country practically retards economic growth or contributes to it that solely depends on the prevailing situation and balance of various other factors determining the growth in an economy. Natural Resources and its Utilization: Availability of natural resources and its proper utilization are considered as an important determinant of economic development.

Accordingly, higher rate of population growth can put serious hurdles on the path of economic development Moreover, growth of population at a higher rate usually eat up all the benefits of economic development leading to a slow growth of per capita income.

But it has also been argued by some modern economists that with the growing momentum of economic development, standard of living of the general masses increases which would ultimately create a better environment for the control of population growth.

The increase in the volume of capital formation leads to capital accumulation.

Thus it is quite important to raise the rate of capital formation so as to accumulate a large stock of machines, tools and equipment by the community for gearing up production. Ragnar Nurkse has rightly observed, “The meaning of capital formation is that society does not apply the whole of its current activity to the needs and desires of immediate consumption, but directs a part of it to the making of capital goods—tools and instruments, machines and transport facilities, plant and equipment.” There are three stages in the process of capital formation, i.e., (a) Generation of saving, (b) Mobilisation of savings and (c) Raising the volume of investment.

Moreover, capital formation requires the suitable skill formation so as to utilise physical apparatus or equipment for raising the productivity level.

In an economy, capital accumulation can help to attain faster economic development in the following manner: (a) Capital plays a diversified role in raising the volume of national output through changes in the scale or technology of production; (b) Capital accumulation is quite essential to provide necessary tools and inputs for raising the volume of production and also to increase employment opportunities for the growing number of labour force; (c) Increase in capital accumulation at a faster rate results increased supply of tools and machinery per worker.