This document discusses development economics and concepts related to measuring economic development. It addresses questions about the role of the state in economic development, how technological advances from neighboring countries could benefit Sri Lanka, criticisms of using GNP to measure national welfare, and the differences between income-based measures of inequality and social measures like the Human Development Index. The document provides definitions and explanations for key economic development topics. It also analyzes Sri Lanka's progress on factors like health, education, poverty, and gender disparities based on data from sources like the UN and Central Bank of Sri Lanka.

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BA DEGREE IN SOCIAL SCIENCES
LEVEL -4, SEMESTER-2
TMA-2
SSU-2205-INTRODUCTION TO DEVELOPMENT ECONOMICS
REG-NO-30730163
(a) “Development economics is concerned with social .political and institutional
mechanism necessary to bring about changes in levels of living for the masses”. Do
you agree with this notion? Explain.
Yes, I agree with this statement .because development economics is not a single process it
concerns the whole countries development of each distinct sector. There is a famous definition
that,
“Economic development is a process of improving the quality of lives. The equal
important aspects of development are,
1) Rising people’s living standards, their income and consumption levels of food,
medical services education etc, through the process of economic growth.
2) Creating conditions conducive to the growth of peoples self esteem through the
establishment of social ,political and economic systems and institutions that
promote human dignity and respect and,
3) Increasing people’s freedom and the range of their choice by providing an
increased variety of consumer goods and services”.
- Todaro 1994 -
These are the core values of the development economics. As mentioned in the above definition
the 1st value it concerns the people’s levels of living. It includes, in additions to higher
incomes, the provision of more jobs, better education and greater attention to cultural and
human values, all of which will serve not only to enhance material well-being but also to
generate greater individual and national self esteem.
On the other hand to change the people’s living standards we need do increase the availability
and widen the distribution of basic life sustaining goods such as food, shelter, health and
protection and also need to consider to expand the range of economic and social choices
available to individuals and nations by freeing them from servitude and dependence not only in
relation to other people and nation states but also to the forces of ignorance and human misery.

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(b) Some policy makers believe that the state can effectively engage in commercial
activities. What do you think the role of the state in the economic development of a
country?
The role of the state in the development well known as a facilitator and facilitating their
citizens and reaching the development goals. State is the major contributor of the development
process. Because state has the responsibilities and they bound to complete their promises while
in election.
Every state (developed and underdeveloped) in the existing world has being playing a
significant role and a reputed service to achieve their development goals and empowering their
living standards of the people.
Therefore the state can effectively engage in commercial activities such given below.
 agricultural activities like buying seeds and crops from the local farmers, investments in
the farming and livestock developing industries, exporting tea, natural rubber and
desiccated coconut to the international market.
 Social and institutional investment opportunities in social security and improving
education facilities and advanced theological usage to development.
 Industrial and service sector activities like promoting tourism can improve and attract
the foreign investment. In the service sector the general health care services to the
public with the collaboration of private sector investment and free medical care for all.
So these are the facts but in the international arena state play an agent of investment activities
and bilateral trade with other states .so this is the role of state in economic activities.

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(c) Technological change can promote economic growth and development. Explain how
Sri Lanka could benefit from its technologically advanced neighbors.
Technology is an essential for the development of a nation. Thus the technological innovations
have reached out in to development of a country in every sector. Such instances like
agricultural sector with the development of biotechnology and robotics.
The real situation is we are in the developing stage but the development s could affect the poor
countries by providing substitute products while would affect millions of jobs in agriculture
and industry. In the case of developing country like Sri Lanka we need to think before adapting
new technological methods to national development process.
According to H R Hicks, there are three different kind of new technologies are, Neutral
technology which means increase of output with the same level of capital and labor, Labor
saving technologies means having the same level of output through the introduction of
advanced capital equipments with reduced labor and finally Capital saving technologies that
having same level of output increase of the productivity of labor with less amount of
capital(1).Therefore we need to consider what kind of technology which promotes
development in Sri Lanka.
Countries like China and Japan genetic technology highly practicing for agriculture. The
traditional plant breeding could take more time but in genetic technology could improve the
yields and breeding within three two months. If we adapt this technique to our agro
productions will increase, but in the case of farmers in Sri Lanka they cannot have the
efficiency to use this and they don’t have any expertise of these technology and poor
educational background. These are the factors that affecting the farmers and the government
expenditure on particularly on this matter.
On the other hand East Asian countries and the western also they conduct some
biotechnological research laboratories to product like tomato pulps, orange juice, apple sauce
and tobacco that don’t have to be farm at all times.
But considering to our country these practices are highly cost effective because they need
hormones, seeds, fertilizers and herbicides (2).
The other major development of significant like to be in industry and manufacturing sector.
This is the new industrial revolution in the new millennium involving the replacement of
human beings by robots and other automated equipments. These robots are used to do
surgeries, automobile industry, aeronautical and space technology, also for agriculture.
Therefore at least minimum level of new technologies mentioned above have used to our
national development it is a great effort.therefoe I can conclude new technologies are very
affective to the national development of a country.
1) SSU-2205, BA Level 4,2nd semester, course module block 1, OUSL 1998 Copyright, pages 54-57.
2) CRDS panel of authors 1995,Sri Lanka year 2000:Towards the 21st Century, Ceylon Printer
Limited, Pages 29-31

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(d) GNP measures are criticized for not reflecting the national welfare. Why?
GNP is known as the total production of a country. It’s a sum of gross domestic production and
net foreign factor income. This is an only measurement of total domestic production and it
does not emit the national welfare.
So we need to consider about per capita income which is GDP.GDP is a sum of domestic
production because it includes only goods and services produced within the country. It is a
measurement of final goods produced.
We can measure the GNP as shown below.
GNP = Factor Income Inflows – Factor Income Outflows
GNP = GDP + Net Foreign Factor Income
But if the population of a country rises faster than its real GDP of the people will be low. So
we need to fine the amount of each person got which is known as per capita GDP as follows,
Per Capita GDP = GDP / Population
GNP measures are not reflecting national welfare because the per capita GDP does not show
how income is distributed among the people. For example if the income of the rich rises faster
the poor will not benefits from the rising income as reflected in per capita GDP.
But also the black market transactions like illicit drug and liquor manufacturing and trade, drug
trafficking, under world crimes and frauds. These activities creates considerable amount of
production, income, expenditure. These economic activities are not measured to the GNP and
GDP.the se are the reasons that not reflecting national welfare in GNP.

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(e) In measuring inequality, differentiate income based measures from social measures
such as human development index.
Social inequality is a widespread problem among the world nations. More commonly
economists are using national income and per capita GDP to measure the economic growth of a
country. But these income based measurements has various weaknesses.
In the income measurement does not emits and show the important of the quality of life. This
also not shows how incomes are distributed among the people. For instance a business man
earn 1 million rupee per day, but a general labor depended on his daily income such as few
hundred rupees per day. This is the wide disparity and inequality in distribution of the income.
This is why a richer gets richest, a poorer gets poorer.
On the other hand the United Nations Research Institute for Social Development (UNRISD)
has initiated the process of sampling data bank of social conditions such as infant deaths, life
expectancy at birth, number of doctors to the population; protein consumption and adult
literacy are some of them.
To overcome these problems we need to examine these two measures of development such as
income measures and human development index (HDI).because these two are very important
in measuring the development of a country.
The human development index shows us the:
 Life expectancy at birth, as an index of population health and longevity
 Knowledge and education, as measured by the adult literacy rate (with two-thirds
weighting) and the combined primary, secondary, and tertiary gross enrollment ratio (with
one-third weighting).
 Standard of living, as indicated by the natural logarithm of gross domestic product per
capita at purchasing power parity.

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Let us examine the progress of human development in Sri Lanka listed below.
The progress of Sri Lanka*
Health Education Poverty Gender
Disparities
1) Life expectancy
increased from 72 yrs
in 1993 to 74 yrs in
2004
1) Adult literacy rate
has improved from
90% in 1993 to 91%
in 2004.
1) Per capita GDP has
increased
significantly from
US$ 600 in 1993 to
US$ 1010 in 2004.
1) Female literacy
rate has improved
from 87% in 1995 to
89% in 2004.
2) Infant mortality
rate has declined
from 15 per 1000 live
births in1994 to 12
per 1000 live births in
2004.
2) Pupil teacher ratio
at primary level is 23
in 2004 as compared
to 28 in 1995.
2) Level of inequality
has worsened as the
income share of
richest 20% to
poorest 20% has
increased from 4.4 to
5.1.
2) Share of females in
labor force has
increased from 37.5%
in 1994 to 40% in
2004.
3) Maternal mortality
rate has gone gown
from 140 deaths per
1000,000 live births
in 1993 to 92 deaths
per 1000,000 live
births in 2000.
3) Government
spending on
education as
percentage of GDP
has declined from
3.3% to 1.3%.
3) 41.6% of
population still lives
below US$ 2 per day.
3) Human
development in terms
of gender disparities
has improved as
Gender development
index (GDI) is 0.749
in 2004 as compared
to 0.699 in 1993.
4) Births attended by
skilled health
personnel increased
from 94% during
1983-94 to 96%
during 1996-2004.
*Source-Human Development in South Asia 2007, Oxford University Press India 2008.
These are the differences between income based measurements and social measures.

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Comments from the Tutor:
RFERENCES:
 SSU-2205, BA Level 4,2nd semester, course module block 1, OUSL 1998 Copyright,
pages 54-57.
 CRDS panel of authors 1995,Sri Lanka year 2000:Towards the 21st Century,
Ceylon Printer Limited, Pages 29-31
 SSU-2208, Block1 & 2, Social Work and Welfare, OUSL, BA level-4, Course
Material.
 Saman Kelegama, Poverty Situation and Policy in Sri Lanka.Delevered Speech at
the Asia Pacific Forum on Poverty.2001 at Manila, Asian Development Bank.
 An Analytical Description of Poverty in Sri Lanka, Marga Institute1981.
 Central Bank Annual Reports.