In the economics study of the public sector, economic and social development is the process by

which the economic well-being and quality of life of a nation, region, local community, or an
individual are improved according to targeted goals and objectives.
The term has been used frequently in the 20th and 21st centuries, but the concept has existed in
the West for far longer.[citation needed] "Modernization", "Westernization", and especially
"industrialization" are other terms often used while discussing economic development.
Historically, economic development policies focused on industrialization and infrastructure;
since the 1960s, it has increasingly focused on poverty reduction.
Whereas economic development is a policy intervention aiming to improve the well-being of
people, economic growth is a phenomenon of market productivity and increases in GDP;
economist Amartya Sen describes economic growth as but "one aspect of the process of
economic development".
Definition and terminology
See also: Developed country and Developing country

Gross domestic product real growth rates, 1990–1998 and 1990–2006, in selected countries

Rate of change of gross domestic product, world and Organization for Economic Co-operation
and Development, since 1961
The precise definition of economic development has been contested: while economists in the
20th century viewed development primarily in terms of economic growth, sociologists instead
emphasized broader processes of change and modernization. Development and urban studies
scholar Karl Seidman summarizes economic development as "a process of creating and utilizing
physical, human, financial, and social assets to generate improved and broadly shared economic
well-being and quality of life for a community or region". Daphne Greenwood and Richard Holt
distinguish economic development from economic growth on the basis that economic
development is a "broadly based and sustainable increase in the overall standard of living for
individuals within a community", and measures of growth such as per capita income do not
necessarily correlate with improvements in quality of life. The United Nations Development
Programmer in 1997 defined development as increasing people’s choices. Choices depend on the
people in question and their nation. The UNDP indicates four chief factors in development,
especially human development, which are empowerment, equity, productivity, and sustainability.
Mansell and Wehn state that economic development has been understood by non-practitioners
since the World War II to involve economic growth, namely the increases in per capita income,
and (if currently absent) the attainment of a standard of living equivalent to that of industrialized
countries. Economic development can also be considered as a static theory that documents the
state of an economy at a certain place. According to Schumpeter and Backhaus (2003), the
changes in this equilibrium state documented in economic theory can only be caused by
intervening factors coming from the outside.

Economic development originated in the post-war period of reconstruction initiated by the

United States. In 1949, during his inaugural speech, President Harry Truman identified the
development of undeveloped areas as a priority for the West:
"More than half the people of the world are living in conditions approaching misery. Their food
is inadequate; they are victims of the disease. Their economic life is primitive and stagnant.
Their poverty is a handicap and a threat both to them and to more prosperous areas. For the first
time in history, humanity possesses the knowledge and the skill to relieve the suffering of these
people ... I believe that we should make available to peace-loving people the benefits of our store
of technical knowledge to help them realize their aspirations for a better life… What we envisage
is a program of development based on the concepts of democratic fair dealing ... Greater
production is the key to prosperity and peace. And the key to greater production is a wider and
more vigorous application of modem scientific and technical knowledge."
There have been several major phases of development theory since 1945. Alexander
Gerschenkron argued that the less developed the country is at the outset of economic
development (relative to others), the more likely certain conditions are to occur. Hence, all
countries do not progress similarly.[9] From the 1940s to the 1960s the state played a large role
in promoting industrialization in developing countries, following the idea of modernization
theory. This period was followed by a brief period of basic needs development focusing
on human capital development and redistribution in the 1970s. Neoliberalism emerged in the
1980s pushing an agenda of free trade and removal of import substitution
industrialization policies.
In economics, the study of economic development was born out of an extension to traditional
economics that focused entirely on the national product, or the aggregate output of goods and
services. Economic development was concerned with the expansion of people's entitlements and
their corresponding capabilities, such as morbidity, nourishment, literacy, education, and
other socio-economic indicators. Borne out of the backdrop of Keynesian economics (advocating
government intervention), and neoclassical economics (stressing reduced intervention), with the
rise of high-growth countries (Singapore, South Korea, Hong Kong) and planned governments
(Argentina, Chile, Sudan, Uganda), economic development and more generally development
economics emerged amidst these mid-20th century theoretical interpretations of how economies
prosper. Also, economist Albert O. Hirschman, a major contributor to development economics,
asserted that economic development grew to concentrate on the poor regions of the world,
primarily in Africa, Asia and Latin America yet on the outpouring of fundamental ideas and
models.
It has also been argued, notably by Asian and European proponents of infrastructure-based
development, that systematic, long-term government investments
in transportation, housing, education, and healthcare are necessary to ensure sustainable
economic growth in emerging countries.
During Robert McNamara’s years at the World Bank, he introduced key changes, most notably,
shifting the Bank's economic development policies toward targeted poverty reduction. Before his
tenure at the World Bank, poverty did not receive substantial attention as part of international
and national economic development; the focus of development had been on industrialization and
infrastructure. Poverty also came to be redefined as a condition faced by people rather than
countries. According to Martha Fennimore, the World Bank under McNamara's tenure "sold"
states poverty reduction "through a mixture of persuasion and coercion."
Economic development goals
The development of a country has been associated with different concepts but generally
encompasses economic growth through higher productivity, political systems that represent as
accurately as possible the preferences of its citizens The extension of rights to all social groups
and the opportunities to get them and the proper functionality of institutions and organizations
that can attend more technically and logistically complex tasks (i.e. raise taxes and deliver public
services). These processes describe the State's capabilities to manage its economy, polity, society
and public administration. Generally, economic development policies attempt to solve issues in
these topics.
With this in mind, economic development is typically associated with improvements in a variety
of areas or indicators (such as literacy rates, life expectancy, and poverty rates), that may be
causes of economic development rather than consequences of specific economic development
programs. For example, health and education improvements have been closely related to
economic growth, but the causality with economic development may not be obvious. In any case,
it is important to not expect that particular economic development programs be able to fix many
problems at once as that would be establishing unsurmountable goals for them that are highly
unlikely they can achieved. Any development policy should set limited goals and a gradual
approach to avoid falling victim to something Prittchet, Woolcock and Andrews call 'premature l