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Development Economics. Outline of the Lecture:. Per Capita Income, Causes of Low Per Capita Income, Measure to Increase Per Capita Income. Per Capita Income:. Per capita income is the average income per head of a country.

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Development Economics

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Development economics

Development

Economics


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

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 continued

Per capita income…. continued

  • 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 continued1

Per 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.


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:

    • National Income side causes

    • Population side causes


Causes of low per capita income continued

Causes of Low Per Capita Income…. continued

  • National Income Side Cause:

  • Shortage of natural resources

  • Backwardness of agriculture sector

  • Industrial backwardness

  • Limited savings and investment

  • Unfavorable balance of trade

  • Shortage of technical hands

  • Problem of unemployment

  • Low labor efficiency

  • Inadequate transport and communication facilities

  • Absence of innovative capabilities

  • Social customs and traditions

  • Political instability

  • Corrupt bureaucracy


Causes of low per capita income continued1

Causes of Low Per Capita Income…. continued

  • Population Side Cause:

  • Population birth rate is high

  • Drop in death rate

  • Early marriages

  • Tropical climate

  • Polygamy

  • illiteracy

  • More children are considered as source of power

  • Belief that God is Raziq

  • Joint-family system

  • Absence of recreational facilities

  • Resistance to population control drives


Measures to increase per capita income

Measures to increase Per Capita Income:

  • Full utilization of the natural resources

  • Agricultural development

  • Industrial development

  • Capital formation

  • Technical education

  • Control population

  • Creating Employment opportunities

  • Political stability

  • Infra-structure facilities

  • Patriotism


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