1] Qualitative concept
Economic development is a quantitative as well as a qualitative concept. It tries to explain the quantitative changes in wants, goods, institutions, higher growth rate, better infrastructure facilities.
It is also concerned with social indicators like literacy ratio, life expectancy, self esteem, freedom, social welfare etc.
Therefore Economic Development is Economic Growth + changes in political, technical and institutional set up, social welfare etc.
2] Sectoral transformation (sectoral shift)
Economic development implies a shift in population from agricultural to industry and ultimately the service sector. The shift indicates modernity, skills, discipline etc. (urbanization, industrialization and modernisation).
3] Structural transformation
Economic development changes an economy from an agrarian to an industrial economy and ultimately a large service sector.
As a result the share of agriculture in GNP declines and that of industry and service sector increases.
There is therefore a change in the structure of international trade (net returns from exports and imports become more favourable for the nation).
4] Technological change
Economic development is a process new and better methods of production are introduced. New levels of production will be achieved with new technology, capital intensive technology and a favourable capital-output (ie the relation of investment to the output in a given period of time ie the amount of capital required per unit increase in output. Eg in the developing countries it is 5:1, ie an investment of Rs5/- results in output worth Re1/-).
5] Institutional changes
For eg changes in the land tenure system will bring about greater equality and economic welfare.
6] Public participation
Economic development is possible only when the country participate and cooperative in the process of development.
7] Increase in real national income
An increase in the money/nominal national income may not indicate economic development as it may be due to rise in prices of goods and services. (Nominal/ money national income means real national income multiplied by the price level).
Therefore economic development considers an increase in real income ie an increase in production of goods and services.
8] Increase in real per capita
Economic development should result in an increase in the real per capita income. This reduces poverty and the inequality in the distribution of income and wealth.
9] Increase in economic welfare
When there is an increase in the real per capita income, the benefits of economic development are realized by even the lower income group of people. In other words there is an increase in the economic welfare of the people.
10] Economic development is a dynamic process
Economic development is a dynamic process not a smooth process because the rate of change in GDP will vary as per the variations in the economy (eg due to favourable GDP may increase and unfavourable factors like natural and manmade calamities GDP may decrease).
11] Long run concept.
Economic development is a long run process. It brings about significant changes in the demand for goods and services, supply of factors of production etc.
It implies that an increase in the real national income should be sustained over a long period of time.
Therefore economic development has to be planned in order to achieve the objectives.
12] Role of economic and non-economic factors.
Economic development is influenced by both economic and non-economic factors.
Economic factors include supply of capital, foreign trae, talented entrepreneurs, good infrastructure facilities etc.
Non-economic factors include political freedom and stable government, good social structure and attitude of the people.