For many years, economists have debated the theory of economic development. There is an old saying, “What does not lead to economic growth, seldom does.” While this is true in some ways, such as technological advances can create vast wealth, it is not always true in other ways.
The theory of economic development holds that economic growth occurs when there is a greater division of income through various transactions. This process of creating greater wealth leads to increased production and ultimately, to economic development. However, over time, there is a decrease in the quality of production and economic growth occurs at a much slower rate.
Economic development occurs when various groups in society are able to attain economic wealth. This wealth is then used to provide living standards for the people who possess it and eventually, development occurs. This process of economic development occurs in all societies. However, the level of development varies from one country to another.
When economic growth occurs, individuals are able to purchase homes, cars, televisions, and other forms of consumer and leisure goods. The purchase of these items leads to more economic development. However, when the process of economic growth slows down, the same items that were previously purchased are not able to be purchased. A decrease in economic development may occur because the amount of consumers capable of purchasing these items has diminished.
In addition, economic growth is dependent on the amount of investment capital available to a country or a group of countries. Investment capital is capital that is raised for the purpose of creating new economic growth. If the amount of investment capital available is low, there is less investment capital being invested in the economy. If there is less investment capital available, then wages are not being paid and unemployment is increasing. Thus, in order for an economy to continue moving forward, an adequate amount of investment capital needs to be present.
Economic development occurs when economic growth leads to greater levels of goods and services, better levels of living, and a healthier population. The healthier the population, the higher the living standards of that population. Higher levels of living depend on how well the infrastructure of the country is developed. Finally, the ability of a country to produce goods and services on a timely basis depends largely on the technological sophistication of the various countries' industries and their ability to exploit resources efficiently. Economic development is crucial to the ongoing progress of society.