How far do pattern of economic development and those of human development coreespond with each other?
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Answer:
Savings and economic growth are closely related with each other. Governments of the countries offer a number of saving and investment schemes that are tax exempt in order to promote the practice of saving. The governments in return invest thus earned capital in various development projects of the country, which helps to build a better economy and the growth of economy. The relations between the savings and the economic growth are bilateral as well: the savings increase with the increase in income and the economic growth increases the amount of savings as well. According to the Harrod-Domar growth model, every economy must save a certain proportions of its national income, if only to replace worn-out or impaired capital goods (buildings, equipment, and materials) for the economic growth2. The more they can save and invest, the faster they can grow. New investment will bring about corresponding increases in the flow of national output, GNP. The mechanism of economic growth and development, therefore, are simply a matter of increasing national savings and investment. The main obstacle or constraint on development was relatively low level of new capital formation in most poor countries. Rostow Terms of trade, favorable or unfavorable, could affect economic development. Unfavorable terms of trade will result in a negative or low economic growth particularly in developing countries, as they rely on the export of a single or a few primary commodities Cho and Appleyard . Export-led growth is a trade and economic policy aiming to speed up the industrialization process of a country by exporting goods for which the nation has a comparative advantage. Export-led growth implies opening domestic markets to foreign competition in exchange for market access in other countries. This strategy seeks to find a niche in the world economy for a certain type of export. By implementing this strategy, countries hope to gain enough hard currency to import commodities manufactured more cheaply somewhere else. During 1970 and 80s, the export-oriented industrialization was particularly characteristic of the development of the national economies of the Asian Tigers/Dragons: Hong Kong, South Korea, Taiwan and Singapore.