GDP|Development|National Income

Basic Concept|GDP|Development|National Income

Economic Growth: It refers to increase. in the country’s capacity to produce the output of the goods and services within the country. A good indicator of economic growth is steady increase in the Gross Domestic Product (GDP).

Economic Development: Economic development is a broaden term than economic growth. It deals with the overall development of economy. Economic
development implies a sustained increase in real per capita income of a country over a period of time.

There are three types of economic system existing in the world:
1. Market economy
2. Socialist economy
3. Mixed economy

Market Economy: A market economy is based on the division of labour in which prices of goods and services are determined in a free price system set by
supply and demand.

Socialist Economy : It is an economic system based on the state ownership of capital and here role of market is severely limited. In socialist economy goods and services are produced to use rather than profit to achieve greater equality in decision making and economic affairs.

Mixed Economy: A market economy in which both private sector and firms owned by government take part in economic activity. India has adopted mix
economic system.

Sustainable Development: It is the development that meets the needs of the present without compromising the ability of future generations to meet their own
needs.
The concept of sustainable development was advanced for the first time during the Stockholm Intergovernmental Conference on Human Environment of June 1972.

Inclusive Development: It is the development where fruit of development reaches to every person especially to grass-root level. Inclusive development
ensures people participation in development in true sense.

Capitalism: A type of economic system based on private ownership and control of the factors of production- natural resources, human resources and
capital goods.

Globalisation: The freer cross-border movements of goods and services, labour, technology, real capital and financial capital to create an integrated and
interdependent global economy.

Liberalisation: Economic liberalisation means giving greater freedom to economic agents to take their own decision. In short, liberalisation means a reduced role for government and greater role for the market forces.

Privatisation: Privatisation means selling public assets to individuals or private business interests.

Nationalisation: The government’s seizure of private productive assets with compensation to the previous
owner.

Public Sector: The portion of an economy whose activities are under the control and direction of the state.

Recession: A period of slack general economic activity as reflected in rising unemployment and excess productive capacity in a broad spectrum of industries.

Micro Economics: It is a branch of economics that studies the behaviour of individual, households and firms in making decisions on the allocation of limited resources.

Macro Economics: It is a branch of economics dealing with the performance, structure, behaviour and decision making of the whole economy. This includes national, regional and global economics. Economic activities are broadly grouped into primary, secondary, tertiary and quaternary activities.

Primary Activities are directly dependent on environment and includes hunting, gathering, pastoral activities, fishing, forestry, agriculture mining and quarrying.

Secondary Activities add value to natural resources by transferring raw materials into valuable products. Thus it includes manufacturing, processing and construction industries.

Tertiary Activities includes both production and exchange. Trade,transport, communication and services are some of the tertiary activities. Quaternary Activities includes the collection production and dissemination of information or even the production of information. It centres around research and development.

National Income

Gross National Product (GNP): GNP is the total value of output (goods and services) produced and income received in a year by domestic residents of a country. It includes profits earned form capital invested abroad.

Gross Domestic Product (GDP): GDP is total value of output (goods and services) produced by the factors of production located within the country’s boundary in a year.
GDP=GNP- Net Income earned from abroad

Net National Product (NNP)- NNP is calculated by making some adjusted with regard to depreciation in GNP i.e.
NNP= GNP- Depreciation

Net Domestic Product (NDP)- NDP is also arrived from GDP by making some adjustment with regard too depreciation.
NDP = GDP- Depreciation

Per Capita Income (PCI)-Per Capita Income is an indicator to show living standards of people in a country. If real PCI increases, it is considered to be an improvement in the overall living standard of people. It is calculated by dividing the GDP by the size of the
population.

PCI= GDP/Total population of a country