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ECONOMIC GROWTH
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• Growth from the economic perspective means an increase in the production of economic outputs of goods
and services compared over a particular time. The most important aspect of growth is its quantifiability,
that is, one can measure it in absolute terms.
Factors affecting economic growth:
A. Economic factors
• Natural resources - The natural resources include the land area and the quality of the soil, forest wealth,
good river system, minerals and oil resources, good climate, etc. For economic growth, the existence of
natural resources in abundance is essential. However, the availability of rich natural resources are a
necessary condition for economic growth but not a sufficient one. In less developed countries, natural
resources are unutilized, underutilized or misutilised. This is one of the reasons of their backwardness. On
the other hand countries such as Japan, Singapore etc. are not endowed with abundant natural resources
but they are among the developed nations of the world.
• Capital formation - Capital formation is the process by which a community’s savings are channelised into
investments in capital goods such as plant, equipment and machinery that increases nation’s productive
capacity and worker’s efficiency thus ensuring a larger flow of goods and services in a country.
• Technological progress - Technological progress mainly implies the research into the use of new and better
methods of production or the improvement of the old methods. Sometimes technical progress results in
the availability of natural resources. But generally technological progress results in increase in productivity.
By the use of improved technology it is possible to have greater output from the use of given resources or
a given output can be obtained by the use of a smaller quantity of resources. The USA, UK, France, Japan
and other advanced industrial nations have all acquired the industrial strength from use of advanced
technology.
• Human resource development - A good quality of population is very important in determining the level of
economic growth. So the investment in human capital in the form of educational and medical and such
other social schemes is very much desirable. Human resource development increases the knowledge, the
skills and the capabilities of the people that increase their productivity.
Non-economic factors
• Political factors - Political stability and strong administration are essential and helpful in modern economic
growth. The stable, strong and efficient government, honest administration, transparent policies and their
efficient implementation develop confidence of investors and attracts domestic as well as foreign capital
that leads to faster economic growth.
• Social and pyschological factors – The modern ideology, values, and attitudes bring new discoveries and
innovations and consequently to the rise of the new entrepreneurs. The outdated social customs restrict
occupational and geographical mobility and thus pose an obstacle to the economic growth.
SECTORS IN ECONOMY
Primary sector
• In Primary sector of economy, activities are undertaken by directly using natural resources. Agriculture,
Mining, Fishing, Forestry, Dairy etc. are some examples of this sector.
• It is called so because it forms the base for all other products. Since most of the natural products we get
are from agriculture, dairy, forestry, fishing, it is also called Agriculture and allied sector.
• People engaged in primary activities are called red-collar workers due to the outdoor nature of their work.
Secondary sector
• It includes the industries where finished products are made from natural materials produced in the primary
sector. Industrial production, cotton fabric, sugar cane production etc. activities comes under this sector.
• Hence its the part of a country's economy that manufactures goods, rather than producing raw materials
• Since this sector is associated with different kinds of industries, it is also called industrial sector.
• People engaged in secondary activities are called blue collar workers.
• Examples of manufacturing sector:
• Small workshops producing pots, artisan production.
• Mills producing textiles,
• Factories producing steel, chemicals, plastic, car.
• Food production such as brewing plants, and food processing.
Tertiary sector/service sector

• This sector’s activities help in the development of the primary and secondary sectors. By itself, economic
activities in tertiary sector do not produce a goods but they are an aid or a support for the production.
• Goods transported by trucks or trains, banking, insurance, finance etc. come under the sector. It provides
the value addition to a product same as secondary sector.
• This sector jobs are called white collar jobs.
Quaternary activities
• These are specialized tertiary activities in the ‘Knowledge Sector’ which demands a separate classification.
• The quaternary sector is the intellectual aspect of the economy. It is the process which enables
entrepreneurs to innovate and improve the quality of services offered in the economy.
• Personnel working in office buildings, elementary schools and university classrooms, hospitals and doctors’
offices, theatres, accounting and brokerage firms all belong to this category of services.
• Like other tertiary functions, quaternary activities can also be outsourced.
Quinary activities
• The quinary sector is the part of the economy where the top-level decisions are made. This includes the
government which passes legislation. It also comprises the top decision-makers in industry, commerce and
also the education sector.
• These are services that focus on the creation, re-arrangement and interpretation of new and existing ideas;
data interpretation and the use and evaluation of new technologies.
• Profession under this category often referred as 'gold collar' professions, they represent another
subdivision of the tertiary sector representing special and highly paid skills of senior business executives,
government officials, research scientists, financial and legal consultants, etc.
On the basis of conditions of work
Organised sector
• In this sector, employment terms are fixed and regular, and the employees get assured work and social
security.
• It can also be defined as a sector, which is registered with the government and a number of acts apply to
the enterprises. Schools and hospitals are covered under the organised sector.
• Workers in the organised sector enjoy security of employment. They are expected to work only a fixed
number of hours. If they work more, they have to be paid overtime by the employer.
Unorganised sector
• An unorganised worker is a home-based worker or a self-employed worker or a wage worker in the
unorganized sector and includes a worker in the organized sector who is not covered by any of the Acts
pertaining to welfare Schemes as mentioned in Schedule-II of Unorganized Workers Social Security Act,
2008.
• In this sector wage-paid labour is largely non-unionised due to casual and seasonal nature of employment
and scattered location of enterprises.
ECONOMIC DEVELOPMENT
• Economic development is defined as a sustained improvement in material well-being of society. Economic

development is a wider concept than economic growth. Apart from growth of national income, it includes
changes – social, cultural, political as well as economic which contribute to material progress.
• It is also understood as a process through which simple, low-income economies are transformed into
sophisticated, modern industrial economies.
• It is a qualitative phenomenon which focuses on improvement in the quality and standard of living of the
people.
Objectives of development
• To increase the availability and widen the distribution of basic life sustaining goods such as food, shelter,
health and protection.
• To raise the levels of living, including in addition to higher incomes, the provision of more jobs, better
education and greater attention to cultural and humanistic values, all of which will serve not only to
enhance material well-being but also to generate greater individual and national self-esteem.
• To expand the range of economic and social choices available to individuals and nations by freeing them
from servitude and dependence not only in relation to other people and nation states but also to the forces
of ignorance and human misery.
Physical quality of life index (PQLI)
• The Physical Quality of Life Index (PQLI) is an attempt to measure the quality of life or well-being of a
country.
• It was developed for Overseas Development Council in 1979 by Morris David Morris.
• It was created due to dissatisfaction with the use of GNP as an indicator of development.
• He combined three component indicators to measure performance in meeting the most basic needs of the
people.
These are:
• Basic literacy rate (at the age of 15 years),

• Infant mortality, and
• Life expectancy at age one
• Physical Quality of Life = The PQLI index is calculated by averaging the three indicators giving equal weight
to each and the index is also scaled from 0 to 100.
Human development Index

Categorisation of countries based on HDI

• Very High Human Development: An index of 0.8 and above
• High Human Development: An index of 0.7 – 0.799
• Medium Human Development: An index of 0.55 – 0.699
• Low Human Development: An index of 0 –0.549
• Inequality-adjusted Human Development Index:
o The IHDI indicates percentage loss in HDI due to inequality.
o For India, IHDI value for 2019 is 0.537 (16.8% overall loss).
• Gender Development Index:
o GDI measures disparities on the HDI by gender.
o For India, GDI value for 2019 is 0.820 (World: 0.943).
• Gender Inequality Index:
o GII presents a composite measure of gender inequality using three dimensions:
o Reproductive health
o Empowerment
o The labour market
Planetary Pressures-Adjusted Human Development Index (PHDI):

• For the first time, the United Nations Development Programme introduced a new metric to reflect the
impact caused by each country’s per-capita carbon emissions and its material footprint, which measures
the amount of fossil fuels, metals and other resources used to make the goods and services it consumes.
• This metric is called- the Planetary Pressures-adjusted HDI, or PHDI

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Website: civilstap22@gmail.

com Contact us: 7889296332

Tertiary sector/service sector

• Economic development is defined as a sustained improvement in material well-being of society. Economic

• Basic literacy rate (at the age of 15 years),

Human development Index

Categorisation of countries based on HDI

Planetary Pressures-Adjusted Human Development Index (PHDI):

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