What Is the Importance of Development Economics?

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  • Written By: Peter Hann
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  • Last Modified Date: 08 August 2019
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Traditional economics looks at how to bring about economic growth, but economists have noted that economic growth does not automatically bring about economic development, though it may be a necessary prerequisite for that development. The importance of development economics is that it examines the factors that need to come together to bring about economic development. The level of economic development in a country may be measured by considering levels of public welfare, education, health and liberty. Development economics looks at promoting development by increasing people’s freedom, increasing participation in the system, empowering women, eliminating hunger and poverty, and promoting education and health.

Development economics was founded by economists such as Amartya Sen, who played a part in establishing the Human Development Index as a measure of a country’s economic development. The importance of development economics resides partly in its recognition that there is no particular formula for achieving economic development and that the correct development strategy depends not only on economic factors but also on social and political strategies. The United Nations Development Program (UNDP) works with developing countries to create their own strategies for dealing with the problem of economic development, producing the annual Human Development Report, which uses a number of techniques to measure the level of economic development in developing countries.


The Human Development Index brings together life expectancy, educational levels and per-capita gross domestic product (GDP) to measure the level of economic development. The UNDP also uses a gender-related index to measure the empowerment of women and compiles the Human Poverty Index, which looks at life expectancy, literacy rates, school enrollment rates and per-capital GDP to measure poverty levels. One problem of economic development is that a push for growth often leads to a greater gap between rich and poor, and indices such as the Lorenz curve and the Gini index are used to measure the extent of income inequality in a country. The introduction of these influential measures of development shows the importance of development economics.

Traditional economics concentrated on establishing economic growth by means of trade liberalization, privatization and the deregulation of industry. The importance of development economics was rooted in the realization that, although growth might benefit some parts of industry and society, it may not necessarily promote the welfare of the whole population in a country. The introduction of social and political strategies in addition to economic policies in bringing about greater welfare for the whole population has given policymakers in developing countries a more powerful set of tools to use in promoting the development of their country.


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Post 3

@ddljohn-- That's a very tough question and I'm not an expert on this topic. But I think that since development has a lot to do with government policies, we can definitely say that some types of governments are more conducive to economic development than others.

We should however keep in mind that even a dictatorship may have policies that encourage economic development and a democracy may have policies that discourage it. So I would not lump all democracies and all dictatorships together and make generalizations about them. I think we have to look at each country and follow their development indicators to understand how they're doing on this front.

Post 2

If we're talking about economic growth improving the welfare of an entire society, doesn't that have to do with the type of government? For example, are democracies more conducive to development? And what about socialist governments? They distribute wealth equally, so is socialism conducive to development?

Post 1

I think that international organizations and researchers came to the realization that development economics is important after observing developing countries. They must have seen that despite experiencing economic growth, development in these countries were not taking place as quickly as they should. For example, people's lifespans aren't increasing, literacy rates aren't going up and foreign investment isn't increasing. These are all indications that economic development is slow in a country. Unfortunately, in many developing nations, this is due to corruption and poor government policies and welfare programs.

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