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What is economic development? Meaning and Definition | Types of Capital | Role of Heavy Industry - YouTube
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Hi, welcome to our brand new channel.
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What do you know about economic development?
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Well, let's find out what it means right away.
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Economic development is when a low-income
country grows its national wealth to high
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levels by adding more and more new capital
such as modern housing, public infrastructure,
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office buildings, manufacturing plants, machinery
and equipment.
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New houses, buildings, industrial plants and
machines grow the national wealth.
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In order to understand economic development,
we need to first look into national wealth
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or national capital, which are one and the
same.
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Specifically, we need to understand what makes
up the national capital stock of a country.
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Capital stock is anything that we build using
nature's resources.
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Capital has a useful function, and a country
can create a lot of capital through economic
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activity.
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Capital stock is anything that we design,
make or build that does not perish quickly
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and can be put to use repeatedly such as a
house, for example, which can provide shelter
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for a long time without perishing, or, a tractor,
which can be used repeatedly and usefully
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in farming.
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Capital cannot be consumed.
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It derives its economic value based on what
it can offer us when we try to accomplish
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other useful things such as manufacturing
consumer goods, transportation, entertainment,
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housing.
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Now, based on those same lines, Capital can
be classified into these four types:
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1) Housing capital
2) Public infrastructure capital
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3) non-Industrial business capital
4) Heavy Industry business capital.
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Economic Development is simply the process
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of building up all the above four types of
capital stock over a period from a small or
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nil stock to a large stock.
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A country accumulating a lot of Heavy Industry
business capital represents industrialisation.
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Whereas, a country accumulating the first
three types of capital represents modernisation.
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However, modernization can only happen with
industrialization.
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That's because industrialisation produces
heavy industry.
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And it is heavy industry that manufactures
all the material, machines and equipment used
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across all other economic activities like
farming,
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construction, mining, light manufacturing,
utilities, entertainment, transportation.
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Modernisation is simply performing traditional
economic activities in the modern form using
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technology.
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And heavy industry supplies that technology.
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We now understand economic development.
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Economic development means industrialisation
plus modernisation.
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But industrialisation is hard.
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And not all developing countries have to build
heavy industry to develop.
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Nations with small population can skip industrialisation.
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They can import heavy industry goods from
the industrialised nations.
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As an example, the UAE and Chile, both small
nations, have little to no heavy industry
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but both nations are modern and boast high
income.
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The UAE exports oil and tourism, and Chile,
exports Copper ore.
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Their small population allows them to import
machinery and equipment from the industrialised
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nations using the export dollars.
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On the other hand, South Korea, Taiwan, and
China have industrialised and developed rapidly
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in our modern times.
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In fact, they are the only three major countries
that have industrialised in our modern times.
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That's it for today folks
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