Unit 2

Economic Growth

Q1) What are the Most Important Characteristics of Developing Economics?

A1)

On average, people in developing countries are poorer than people in developed economies. This does not, however, imply that everybody is weak. In reality, some people are extremely wealthy.

2.  Low levels of saving due to low income:

Poor people cannot afford to invest, so a nation with a low average income is likely to have a low savings ratio (savings as a percentage of disposable income).

3.  Low life expectancy and high infant mortality rate:

A person born in Japan can expect to live to be 83 years old, while a person born in Zimbabwe can expect to live for just 37 years.

4.  High rates of population growth:

In a number of developing countries, the birth rate exceeds the death rate, and the dependence ratio is high, with a large proportion of children reliant on a limited number of jobs.

5.  Low levels of education and health care:

Low levels of productivity are common as a result of these factors.

6.  Low levels of capital goods and poor infrastructure:

These, too, lower productivity.

7.  Poor housing and sanitation:

A large number of people do not have access to safe drinking and washing water. A large number of people do not have access to safe drinking and washing water.

8.  Relatively high number of workers, employed in the primary sector:

Agriculture has a high rate of underemployment. For example, ten people might be doing the work of six. Again, this reduces efficiency.

9.  Concentration on a narrow range of exports (most of which are primary products):

The underdevelopment trap, also known as the vicious cycle of poverty, can befall developing countries. This is the issue of a country with low wages having a low saving rate. This ensures that consumer products consume the majority of their resources. As shown in Fig. 1, a lack of capital goods holds production and income down.

Fig 1. The vicious circle of poverty.

Q2) What problems Faces by less developing countries?

A2)

Population growth continues to be one of the reasons why developed countries remain impoverished. For example, due to their large populations, both India and China have traditionally been among the poorer countries. Only after economic liberalisation and opening up of their respective economies did these countries begin to expand at a rate comparable to developed countries.

2.  Governmental Efforts to Combat Population Growth:

Since 1947, when India gained independence from the British colonial rule, one of the cornerstones of its strategy has been population reduction. The Indian government's efforts in this area have been mixed, owing to a combination of ignorance, tradition, and other factors, many of which are related to the country's lack of economic development. Low income combined with big families is a lethal mix that leads to social instability and poor human growth.

This has had a cascading impact on housing, and the government's well-intentioned social security policies have not had the desired effect. On the other hand, after India began liberalising its economy in the 1990s, the pace of population growth has slowed slightly, indicating that the endemic problems associated with population growth may, after all, be addressed.

3.  Education for Women to Reduce Population:

With access to education, it has been simple to enable women to make informed decisions about reproductive health and child rearing in a "new" or balanced manner. Low mortality rates and voluntary participation in birth control services have resulted as a result of this. In this regard, China has been much more effective in combating the threat of population growth due to its strict enforcement of the "one-child" rule.

4.  Shortage of Resource Capital:

The "tyranny of geography," as it has been called, has been cited as one of the reasons for some regions' underdevelopment. This is especially true in the case of many developing countries. Many countries have historically been at the bottom of the economic ladder due to a scarcity of capital. South East Asian countries, for example, were stagnant in economic development before they embarked on a path of export-led growth.

5.  Successful Countries :

South Korea, Thailand, and other countries have limited financial resources. Instead, they focused on what economists called "human capital" for development (we shall see more of this in the next section). As a result, these countries have an advantage over others due to economic development in the form of non-resource-intensive sectors.

6.  Economic Growth in Asian and African Countries:

Several other Asian and African areas, on the other hand, have suffered from a lack of resource resources while embarking on a road of economic growth. However, the negative side of economic development is that many of these countries' natural resources have been pillaged indiscriminately, resulting in destruction and lack of competitiveness.

7.  Scarce Human Capital:

Weak economic growth has a corollary in that human development in terms of social indicators lags behind developed countries. Less developed countries' populations also lack the skills needed to succeed in the global economy due to a lack of access to education and other social needs.

8.  Examples from Tiger Economies:

Countries like the “tiger economies” of Southeast Asia have gotten around this by investing heavily in the “human resource” aspect of growth, giving them an advantage over many of the countries that still lack a skilled workforce and thus are unable to benefit from globalisation.

Fast economic development, on the other hand, generates its own demand for qualified resources, which many countries sometimes fall short of. Once a nation embarks on the road to economic growth, the economy's needs in terms of human resources increase, and the country must keep up with demand by expanding social infrastructure in order to maintain its competitive advantage.

9.  Services Sector and India:

India is an example of a country that has made good use of human capital production, with its Services sector growth ensuring that the economy's overall growth rates remain high? Despite the fact that overall social indicators are low, the availability of qualified resources has benefited service industries such as software and outsourcing.

10.   Poor Infrastructure:

Infrastructure, or the lack thereof, is one of the most prominent reasons for slow economic development among the many ills that plague the developing world. It's a vicious cycle because developing infrastructure necessitates large investments, which poor countries cannot afford. And the economies would not be able to “take off” in a meaningful way unless infrastructure is strengthened.

11.   China and the Great Leap Forward:

As a result, it becomes a cycle of deflation that cannot be broken without the help of multilateral funding institutions such as the IMF and the World Bank. It is instructive to learn from China's experiences, which have included a "leap of development" as a result of its ability to significantly expand its physical infrastructure and then reap the benefits of being the "factory to the world" in the manufacturing sector.

In comparison, countries like India, which are attempting to enter a high-growth mode, have seen infrastructural constraints pull them down even as other industries, such as the Information Technology industry, develop at a rapid pace.

12.   Regional Conflict:

The African economies, which are perpetually at war with each other and within themselves, are the strongest examples of countries that have had low economic development due to regional conflicts. Despite the abundance of resources in Western Africa, the country's economic growth has been hampered by civil war in many of these nations.

Poor economic growth brings with it issues of scarcity and competition for scarce resources, resulting in frequent internecine battles between ethnic groups for the same resources. As a result, these countries are unable to resolve regional disputes without the involvement of the United Nations and other regional forces, and the peace that they broker is often unstable and vulnerable to disruption.

High rates of economic growth, on the other hand, fuel a different kind of conflict, namely the race for the spoils of growth, as seen in some South Asian countries, which, despite high rates of growth, are plagued by conflict.

13.   Corrupt Systems and Institutions:

This is a widespread issue in many countries that gained independence from colonial forces in the second half of the twentieth century. Poor economic development leads to ineffective governance and a disregard for the rule of law.

In contrast to the western countries, where institutions have been in place for centuries and civil society has reached a broad consensus on the nature of governance and the welfare state, many of the less developed countries' institutions are under attack from vested interests, and the common man pays the price for bad governance.

Q3) Explain Subject-Matters in detail?

A3)

In several respects, the state has emerged as an active participant in the economic growth process today. The laissez-faire ideology is no longer valid.

Now, the government is becoming more involved in productive activities and is directing the course of economic activity through its monetary and fiscal policies. It also defines how goods and services are distributed in the economy.

The development process in developed countries took a long time, but underdeveloped countries today do not have that luxury, and it is critical for them to accelerate their development. In this situation, the government plays a significant role in the construction process.

These countries have remained stagnant, necessitating constructive government action to get them back on track. The state must play a strategic role in order to minimise the multiple rigidities that exist in an underdeveloped world.

“In addition to the functions that governments usually perform, there is a vast borderland of functions that governments ought to perform for the simple reason that they are necessary and are not carried out adequately by private effort,” according to the UN Study Group. This borderland can exist in any region, but it is wider in developing countries because private enterprise there is more knowledgeable and enterprising.”

Planning is not limited to interference in underdeveloped countries; it is seen as a critical condition for economic growth. Due to the scarcity of resources in developing countries, it is important to plan their distribution among various projects as well as their use in these projects.

Thus, underdeveloped countries cannot avoid preparing if they want to progress in a reasonable amount of time, implying that the time factor is critical.

Since the problems that exist in underdeveloped countries cannot be solved by private businesses, government intervention is needed for these countries' economic growth.

It has control over the production, distribution, and consumption of goods, and in order to do so, the government must devise physical controls as well as monetary and fiscal policies, which are critical for reducing economic and social inequality in developing countries.

The scope of government policy is enormous. “Maintaining public services, influencing resource usage, influencing income distribution, controlling the quantity of money, controlling fluctuations, ensuring full employment, and influencing the amount of investment,” according to the study.

As a result, in order to ensure rapid economic growth in underdeveloped countries, the state must bear significant responsibilities. There are two types of steps that can be used to complete this task: (A) direct and (B) indirect.

Q4) Explain Direct measure in details with following functions?

A4)

For the economic development of under-developed countries state has involved itself directly and performs certain vital functions which are enumerated below:

Organizational improvements play a significant role in the economic development process. It entails the widening of the market's size as well as the organization of the labour market. Since private sector is incapable of implementing such schemes, the government should build transportation and communication infrastructure to expand the market. Furthermore, the government will assist in the expansion of agriculture and industry. The organization of the labour market is also one of the government's responsibilities.

It improves the labour efficiency. The government assists in labour organisation by supporting labour unions. It establishes machinery for the resolution of labour disputes, establishes working hours, and provides for social security programmes, among other things.

This creates a relationship between employers and workers, which increases labour productivity, which increases production and lowers costs.

The majority of people in rural areas work in farming operations for a set period of time. They are unaware of the job prospects available in cities and manufacturing centres. Through establishing information centres in rural areas, the government will assist them in finding work. As a result, the government will aid in labour mobility.

When construction labour shifts from rural to urban areas, the issue of urbanisation occurs, and it is solved by the government. Housing, drinking water supply, power, slums, transportation, and other issues are among them.

2.  Social and Economic Overheads:

The shortage of economic overheads such as means of communication and transportation, ports, electricity irrigation, and so on, is the biggest impediment to underdeveloped countries' economic growth. These services are rendered by private businesses in industrialised countries.

Private companies, on the other hand, are reluctant to invest in underdeveloped countries because the returns are insufficient, and such large investments are beyond the ability of the private sector.

Aside from that, underdeveloped countries have a scarcity of entrepreneurial talent, and entrepreneurs tend to invest in trade, housing, gold, and jewellery, among other things, where the rate of return is high. As a result, in underdeveloped nations, it falls to the government to have these economic overheads.

It must also have facilities for education and training, as well as health care, in order to accelerate economic growth. According to Prof. Meier and Baldwin, expanding educational facilities and public health measures in developing countries reduces the barrier to growth.

3.  Education :

In the process of economic growth, education plays a critical role.

“It seems pointless to begin a national development programme while leaving the population largely illiterate,” Myrdal says. Underdeveloped countries benefit from educational facilities that improve their regional and occupational mobility, increasing competitiveness and promoting innovation. For economic development, the quality of labour is critical.”

Even when untrained employees work long hours, their per capita income is poor. The state will increase the productive labour pool and therefore their competitiveness by investing in public education. Primary education should be provided for free and compulsory, and secondary schools should be created.

Various training institutions for mechanics, electricians, artisans, nurses, teachers, and others should be founded.

As a result, “education is at the heart of the effort to forge the bonds of shared citizenship in order to mobilise people's energy and grow the nation and human capital in every part of the country.” Education serves both as a client and as an investment. Prof. Galbraith believes that investing in every man's education is directly productive.

He claims that while rescuing farmers and workers from illiteracy is a worthy goal in and of itself, it is also a necessary first step toward any kind of agricultural development. When viewed in this light, education becomes a highly profitable investment.

He goes on to say that "the fact that something is both a customer service and a source of productive resources for society does not diminish its value as an investment." Rather, it emphasises its significance.” As a result, education is at the heart of growth.

4.  Public Health and Family Planning:

The government has important roles to play in the creation and maintenance of public health programmes. People's wellbeing must be preserved in order to maximise labour production and productivity.

Improved environmental sanitation in both rural and urban areas, removal of stagnant and polluted water, improved sewage disposal, control of communicable diseases, provision of medical and health services, especially in the field of maternity and child welfare, health and family planning education, and training of health and medical personnel are all examples of public health measures.

In developing countries, public health is more important because it has the potential to increase labour composition and productivity. All development efforts, however, would be in vain if population growth is not slowed.

Meier and Baldwin point out that public health policies have a positive and negative effect on economic growth.

They aid growth by enhancing the labour force's qualitative composition. At the same time, through growing population, they make the need for development much more urgent. Improvements in health will result in a decrease in the mortality rate, which will increase the population and have a negative impact on economic development.

The issue of poverty in developing countries cannot be solved unless the population growth rate is slowed. Fertility rates need to be reduced in highly developed countries. In order to achieve this, family planning clinics should be established in rural, industrial, and other backward areas. There should be financial benefits for parents who want to have less children. More focus should be placed on eliminating obstacles to birth control and increasing the marriageable age, among other things. In underdeveloped nations, population growth can be prevented if a government-wide family planning policy is implemented. To include, Lewis quotes, "One needs to put all the ingredients into this pie, to convert social leaders into seeing the dangers of a high birth rate, so that taboos and religious sanctions turn against it, instead of favouring it; to rapidly raise standards of living and education, so that women find it convenient to have fewer children, and to make widespread propaganda about birth control technology." On all fronts, action is needed at the same time.

5.  Changes in Institutional Frame Work:

Economic development is impossible to achieve within a rigid institutional framework. The rigid institutional framework in UDC is a positive impediment to growth. “The difference between economic growth in advanced countries... and development in so-called developing countries is that in the former, attitudes and institutions are by and large, adopted to change, and the society has innovations and progress built into the system, whereas in the latter, attitudes and institutions, and even policies, are stubborn obstacles,” as Prof. Paul Streeten correctly observed.

People in a country must want change, and their social, economic, legal, and political institutions must support it, but these conditions are largely absent in UDC, and a social and cultural transformation is urgently needed. “The citizens of a country must seek development, and their social, economic, legal, and political systems must be favourable to it,” according to the United Nations.

In underdeveloped nations, these conditions are largely absent, and many of them need a social and cultural revolution. “There is a context in which rapid economic growth is unlikely without painful adjustments,” according to a United Nations report. Ancient philosophies must be abandoned, old social systems must be dismantled, caste, creed, and race relations must be broken, and a vast number of people who are unable to keep up with change must have their hopes for a comfortable existence dashed.” Institutional reforms alone do not bring about economic transition. Both economic and non-economic factors contribute to it. As a result, there must be a causal association between economic and structural changes, or else these changes will be unrelated. The government has a significant role to play in reforming the institutional framework of developing countries and fostering the creation of new institutions. “New technologies may result in the creation of new commodities or a reduction in the cost of producing existing commodities.

New roads, shipping routes, and other communications improvements can open up new trade opportunities. New demands can be generated by war or inflation. Foreigners can enter the country, bringing with them new trades, new money, and new job opportunities.”

As a result of these emerging possibilities, institutional changes occur. Land reforms, improvements in inheritance rules, monopoly regulation and control, money market regulation, and distribution system improvements are all examples of structural changes that the state can bring about.

“Every government has to take an attitude on such questions as whether it favours large or small scale enterprise, competition or monopoly, private entrepreneurship, co-operatives or public cooperation, and whether its attitude is to be backed by legislation and administrative action,” according to Lewis. In addition to assisting in the development of appropriate economic institutions, the government will play a significant role in shaping a country's social and political institutions.”

6.  Stepping up Rate of Investment:

Increasing the rate of investment speeds up the construction process. In comparison to their investment needs, UDC's savings rate is woefully insufficient. As a result, it is important for the government to increase the rate of capital accumulation in these countries, which it can do by taxation or inflation.

Because of their government's active position in capital development, socialist economies have also been able to save and spend a large percentage of their national income.

7.  Agricultural Development:

The majority of people in UDC depend on agriculture for a living. Irrigation and credit facilities are two major roadblocks to economic growth. Agriculture is the foundation of the economy, and other industries depend on it for raw materials. If agriculture remains stagnant, the rest of the economy will suffer.

Q5) What are the main elements given by Shriram Narayan in the preparation of agricultural production plans at the village level?

A5)

(i)Increase in the area under multiple cropping;

(ii) Multiplication of improved seed in the village and distribution to all cultivators;

(iii) Increase in the area under multiple cropping;

(iv) Increase in the area under multiple cropping;

(v) Increase in the area under multiple cropping;

(vi) Increase in the area under multiple cropping;

(vii) Increase in the area under multiple cropping;

(viii) Increase in the area under multiple cropping;

(ix) Increase in the area under multiple

(x) Fertilizer supply;

(xi) Compost and green manure programmes;

(xii) Adoption of improved agricultural practises, such as soil conservation, contour bonding, dry farming, drainages, land reclamation, and plant protection, to name a few;

(vii) Programmes for new minor irrigation works in the village, both with community support and on an individual basis;

(viii) Programmes for the implementation of improved agricultural implements;

(ix) A poultry, fish, and dairy product production programme; x) A vegetable and fruit production programme;

(xi) Animal husbandry, such as the supply of stud bulls, the establishment of artificial insemination centres, and the castration of scrub bulls, among other things; and

(xii) Animal husbandry, such as the supply of stud bulls, the establishment of artificial insemination centres, and the castration of scrub bulls, among other things.

(xii) Village fuel plantations and pastures production programme. Land reform steps taken by the government are critical to the success of agricultural development programmes.

Q6) What are the main objectives of land reform measures according to IPC?

A6)

To eliminate impediments to increasing agricultural production that are caused by the agrarian system that has been passed down through the generations. This should help to create conditions for (i) eliminating all elements of exploitation and social injustice within the agrarian system, providing security for the tiller, and ensuring equality of status and opportunity to all sections of the rural population as quickly as possible; and (ii) eliminating all elements of exploitation and social injustice within the agrarian system, providing security for the tiller and ensuring equality of status and opportunity to all sections of the rural population.

Land reforms measures include:

(1) Abolition of intermediaries;

(2) Tenant security;

 (3) Right to purchase land cultivated by tenants;

(4) Compensation for permanent improvements made on land by tenants;

 (5) Limiting the rent paid by landowners;

 (6) Agricultural Holdings Ceilings; and

(7) Consolidation of Holdings.

As a result, the government's agrarian policy includes co-operative agriculture, irrigation and credit facilities, and the development of subsidiary industries, among other things.

Q7) Explain Industrial Development as well as Influencing the Use of Resources in Brief:-

A7)

Natural resources are underdeveloped or undeveloped in LDCs. This is due to the fact that these countries were colonised for a long time, and their natural resources were ruthlessly exploited for the benefit of the colonisers. It made no sense to leave the development of these resources in the hands of foreign dominating countries after they had gained their independence.

Furthermore, these impoverished countries lack essential and critical industries such as iron, steel, cement, and heavy engineering, among others. These industries, in particular, necessitated significant capital investment and technological expertise. In these nations, private investors are unable to provide these basic facilities. Furthermore, private entrepreneurs are extremely hesitant to join these fields of development.

As a result, starting basic and key industries to improve the country's economic growth becomes a top priority. These large industries, once again, require a long gestation period. These nations, on the other hand, undoubtedly have some simple consumer goods industries that are primitive and superstitious.

Few companies dominate the entire economic system, and factories are concentrated in a few major cities, leaving the majority of the world behind and beset by problems.

As a result, it is imperative that the government step forward and take steps to formulate and enforce a sensible industrial policy. This industrial policy should emphasise the decentralisation of manufacturing so that they can expand across the country without political intervention.

A strategy should be developed to encourage exports as a replacement for imports, which will aid rapid economic growth. Cottage and small-scale enterprises should be developed in rural areas with special attention paid to using local resources. It must provide more job opportunities for people living in rural areas.

Furthermore, the government should work to avoid the creation of monopolistic organisations and the accumulation of resources in a few hands. Importing capital equipment, machinery, technological know-how, and even raw materials will help the state contribute significantly to the growth of private industries.

It should also include a variety of incentives and facilities to promote basic and key industries. They can offer low-cost credit, tax breaks, low-cost electricity, water, and transportation, among other things, to those working in consumer goods industries for domestic consumption.

2.  Influencing the Use of Resources:

Under- and mis-utilization of capital are common characteristics of UDC. As a result, the government must take steps to ensure that resources are used effectively. The protection of natural resources such as forests and minerals is a concern. They must not be permitted to be used in an inefficient manner.

In this case, the government must play a part in influencing how scarce resources are used. There are also issues with proper land use, town planning, and industry position, all of which necessitate long-term and systematic government planning.

Q8) Short notes on:-

1) Removal of Inequalities.

2) Optimum Allocation of Resources.

3) Maintenance of Peace and Security.

4) Balanced Growth.

5) Self Reliance.

A8)

Another essential role of the state is to eliminate or at least reduce economic and social inequality. Owing to the extremely unequal distribution of wealth, there is a significant social divide between different classes of society. In reality, economic and social inequality are inextricably linked.

The government must take reasonable steps to ensure that capital is distributed fairly. The government should levy progressive taxes on income and capital, as well as on luxury goods, and use wise public spending policy to help the poor.

“The usual argument that economic inequality enriches the upper class by allowing them to save more of their higher income has even less relevance in most UDC where landlords and other wealthy people are known to squander their income in conspicuous consumption, investments, and sometimes capital flight,” writes Prof. Gunnar Myrdal.

In every UDC, the policy declaration emphasises the importance of greater equality and, in particular, raising the standard of living. In these nations, social disparity is also rising. Policy steps should be taken to benefit the poor, but the majority of them are not enforced or implemented in a way that benefits the poor.

It is evident that only disparities arising from the systems of ownership of means of production and inheritance are addressed. Functional differences resulting from hard work, schooling, intellect, and other factors play an important role in the development process.

2.  Optimum Allocation of Resources:

The optimal use of economic capital is a challenge for the UDC. Natural resources are not only underutilised, but also mis-utilized in the majority of UDC. Without the active involvement of the state, conducting a proper survey of natural resources and their proper exploitation is impossible.

The various economic policies should try to achieve a proper balance in the rate of growth of different sectors and industries within each sector.

To ensure a sustainable economic development, more job prospects must be pursued. Not only does the UDC lack money, but it is also immobile. The government should increase factor mobility by disseminating knowledge about job openings and establishing work exchanges and other relevant institutions.

The ultimate goal of economic growth is to ensure that labour and other resources are fully utilised. People's attitudes must be moulded in the right direction by the state. They must follow a work ethic, a thrifty mindset, and other growth issues.

3.  Maintenance of Peace and Security:

Peace and stability are two items that are essential for economic development. As a result, it is the duty of the state to preserve internal law and order as well as to protect the nation from external invasion. It will offer economic stability and aid in the making of bold decisions. A nation in the midst of a long-running war or internal conflict cannot effectively plan economic growth.

4.  Balanced Growth:

UDC's development is lopsided and unbalanced. It is recognised that the UDC must pursue a balanced growth strategy, but this cannot be accomplished by a single company. The government must carry it out in a systematic manner.

To achieve the desired improvement, the state must be a great innovator and industrial leader. The state is now regarded as a significant agency in supporting the economy's balanced development.

5.  Self Reliance:

For their construction programmes, UDC is reliant on foreign trade. International assistance is useful at the beginning stages of growth, but the process cannot continue indefinitely. These countries will eventually stand on their own two feet. As a result, these countries must be self-sufficient.

It should be seen as a way to achieve economic growth rather than an end in itself. This necessitates the creation of a large manufacturing base. At a certain point, international aid becomes a burden rather than a source of assistance. Then it is preferable to abolish it in order to achieve economic growth success. To achieve this goal, the government must play a significant role.

Q9) Explain Indirect measure in details with following functions?

A9)

By increasing the amount of scarce capital, raising the efficiency of factor of production, improving economic and social conditions, and eliminating numerous bottlenecks in the economic growth process, proper monetary policy aids economic and industrial development. Government regulation of money supply is important in developed countries because they have ensured full employment.

However, in UDC, unemployment is largely due to a lack of money to put people to work, rather than cyclical fluctuations. Capital creation can be used to verify this by generating additional resources. In such countries, monetary policy must be used as a tool to boost capital accumulation and direct investment opportunities through the right channels.

2.  Fiscal Policy:

Fiscal interventions, such as improvements in government revenue and spending trends, are gradually being seen as a beneficial tool of government policy in the United Democratic Republic of Congo. Taxation may be used to boost savings by limiting consumption and directing expenditure into beneficial channels while keeping it from moving into undesirable lines.

Direct investment through socially favourable networks stimulates private investment, promotes distributive justice, and reduces economic volatility, among other things. Deficit financing will help UDC increase its capital formation rate.

3.  Price Policy:

The regulation and control of prices is another significant area of government economic operation in LDCs. Prices rise in the early stages of economic growth as a result of increased investment in the economy as a result of the government's deficit financing strategy. As a result, the government must develop an appropriate pricing strategy and keep the prices of essential commodities under control.

4.  Increase in Foreign Trade:

Global trade does exist in a UDC, but it is limited in terms of both value and quantity. The government should encourage exports, make it easier to import products that are needed to support and accelerate economic development, and limit the import of luxury goods.

Foreign exchange crises in developing countries can be avoided if the government takes appropriate exchange management measures to ensure that limited foreign exchange resources are conserved and used properly.

5.  Strengthening of Public Sector:

Another important function of state economic growth is to stimulate the public sector to provide adequate social welfare to the general public.

6.  Economic Planning:

To solve a variety of problems, a prioritised procedure must be followed. Today, the option is between various degrees of preparation rather than between planning and non-planning. As a result, the government monitors the use of economic capital for socially beneficial programmes. Public funds are used to ensure that various programmes progress in a sustainable manner.

They need capital for investment, but UDC is cash-strapped, and funds can be raised by deficit financing as well. As a result, it is the government's primary responsibility to ensure that these funds are spent properly and that no resources are wasted. Furthermore, they ensure that deficit financing has no inflationary effects on the economy.

7.  Public Debt:

When the government lacks internal support, it seeks outside help to speed up the country's economic growth. In this regard, the government has taken some measures.

Q10) What are the certain Limitations of Indirect Measures?

A10)

1. Economic growth preparation, initiation, and direction are insufficient. The plans themselves are sound, but their execution is incomplete in the majority of developing countries.

2. The government machinery in the United Democratic Republic of Congo is generally corrupt and inefficient. The rapid expansion of the state's position has resulted in corruption, which is particularly dangerous in LDCs where public morality is poor.

3. Undue state intervention in economic life leads to tyranny, and people's economic independence is lost as a result.

4. Government administrative machinery in developed countries has limited capacity to conduct expanded development functions. The administrative machinery of the government is inefficient and underdeveloped.

As a result, it is impossible to rely on government policies and programmes in an effective manner. The capability and efficiency of administrative machinery must be considered when expanding the government enterprise.

5. The government is under a lot of political pressure, which makes it difficult to focus on the most relevant economic activities. Priorities are skewed, and public-sector programmes are chosen to appease different interest groups rather than on the basis of their economic viability.

6. As the state assumes more and more duties, the administrative burden and expense increase. The administrative machinery malfunctions, and the public service expands at such a rapid rate that it becomes difficult to find sufficiently qualified and skilled people to manage it. It becomes difficult to sustain delivery efficiency when less skilled and successful people must be hired.