On the other hand, changes arising on the factor supply are also related to—capital accumulation, discovery of new resources, introduction of new and more efficient production techniques, increase in size of population and organisational changes.
Cause and consequences of economic development are mostly determined by the time path and velocity of these aforesaid changes.
Thirdly, by the term economic development we mean continuous increase in the level of real national income over longer time period, covering a period, not less than 25 to 30 years.
While explaining the distinction between economic development and economic growth, C. Spengler has listed about nineteen determinants but Rostow mentioned six propensities having much bearing on economic growth.
Hicks opined, “Economic Development deals with the problem of underdeveloped countries whereas ‘Economic Growth’ deals with the problem of developed countries.
Changes arising on the demand side are mostly related to consumers, tastes and preferences, distribution of income, size and composition of country’s population, and other organisational and institutional changes.Thus in conclusion it can be observed that availability of natural resources and its proper utilization is still working as an important determinant of economic growth. Capital Formation and Capital Accumulation: Capital formation and capital accumulation are playing an important role in the process of economic development of the country.Here capital means the stock of physical reproducible factors required for production.If the countries are rich in natural resources and adopted modern technology for its utilization, then they can attain higher level of development at a quicker pace.Mere possession of natural resources cannot work as a determinant of economic development.Firstly, population provides labour and entrepreneurship as an important factor service.Natural resources of the country can be properly exploited with manpower resources.With proper human capital formation, increasing mobility and division of labour, manpower resources can provide useful support to economic development.On the other hand, higher rate of growth of population increases demand for goods and services as a means of consumption leading to increasing consumption requirements, lesser balance for investment and export, lesser capital formation, adverse balance of trade, increasing demand for social and economic infrastructural facilities and higher unemployment problem.P Kindleberger observed, “Economic growth means more output and economic development implies both more output and changes in the technical and institutional arrangements, by which it is produced.” As per this view, the term growth implies higher level of output as well as achievements in terms of increase in the volume of economic variables. These propensities are: (1) Propensity to develop fundamental services, (6) Propensity to have children.Accordingly, Kindleberger further observed, “Growth involves focussing on height or weight, while development draws attention to the change in functional capacity.” Although some economists have observed slight differences between economic development and economic growth but all these differences are imaginary and unreal and thus have little practical value. Arthur Lewis has rightly observed, “Most often we shall refer only to ‘Growth’ but occasionally, for the sake of variety to ‘Progress’ and ‘Development.’ By economic development we mean attainment of higher level of productivity in almost all the sectors and a better level of living for the general masses. All these propensities are showing a clear-cut picture of determinants of economic growth neglecting the non-economic factors totally.