Economic development is a socio-economic process. Before starting this process some pre-conditions and positive environment is needed.
The preconditions of economic development are called the elements of economic development.
The pre-conditions are as follows –
1. Natural resources:
One of the important pre-requisite is natural resource. The country which have more natural resources there is more favourable condition for development. The country which has no natural resources cannot think of rapid economic development.
2. Human resources:
Rapidly growing population is an obstacle in the way of development but controlled, educated and skilled population can increase the development process, because skilled and educated population is called human capital. And it can ensure the proper utilization of natural resources.
3. Capital formation:
Scarcity of formation of capital is an important hindrance for economic development of any country. Savings and formation of capital are inadequate because of per capital income is too poor. When income and savings increase capital also increase.
4. Entrepreneurship class:
The role of entrepreneurs is great in private sector for economic development. The main role of entrepreneurs is establishing mills and workshops, especially in large industry in public sector, and to bear the risk and uncertainty.
Economic development is greatly depends on production, and much production fully depends on technological development. It technology
society. The amount of production is very limited and scarce in this stage. Modern science and technology is not applied in production sector in this stage. As a result per-capital income is very low. In this stage savings, investment and capitalization rate is tremendously low. Social disorder and political uncertainty is existed in the country. For that above reasons in the traditional society, the rate of economic development is very low.
6. Pre-take off stage:
Pre-take off stage is the starting point of economic development. The knowledge of science and technology spread out and rate of literacy increased in this stage. A group of entrepreneurs are ready to take any types of risk for capital investment. In pre-take of stage 5% of national income is applied in capitalization.
Totally economic development is occurred here but not in satisfactory stage. Kenya, Thailand, Cambodia are in the pre-take-off stage.
7. Take of stage:
Take of stage is the fighting stage of economic development. In this stage employment and newly invented industries are increased. For greater employment and savings as well as capital are increased. 5-10% of total national income is applied in this stage. Generally one country stays in this stage for 20-30 years. India, Philippine, Chile is the models of this stage.
8. Self Sustaining Stage:
Self sustain stage is the highest stage in the optimum level of economic development. In this stage one country fully stops its import and produces it. They don’t take any loan. Here production rate is faster than population growth rate. 10-20% national income is applied for capitalization. It takes 60 years for one country to reach this stage.
9. Mass consumption:
When the consumption is more than optimum level is called mass consumption. In this stage many industrial institutions are engaged in luxurious product. Here over consumption of foods, cloths, and commodities are noticeable. USA, UK, Canada, China, Japan has reached in this stage.