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Development Approaches and Best Approach for Economies of Developing Countries


Development in economics refers to improving the standard of living of a country’s citizens. Economists have been on their toes to study the economy and growth of a nation. This can be done through various approaches such as economic growth, structural theory, development economics, and poverty alleviation. Development is a complex issue, and economists use these approaches to study it. They are discussed below.

Economic Growth approach

Economic growth can be defined as the process through which a nation’s natural national and per capita income elevates over a long time. An escalation in per capita is an indication that there is a development in the economy. Economists have been using this to study the level of development. It is a way of looking at whether a country is getting richer or poorer and whether the standard of living of its citizens is improving or deteriorating. Escalation of real income must be over a long duration as it enhances job creation and the country’s revenue. Economic growth is a valuable way of measuring development because it is a relatively straightforward metric. It is easy to measure, and it is possible to compare economic growth rates across countries. Using this approach, the economist faces some challenges since the resources are scarce. What is supposed to be produced? How is it felt to be made? To whom should it be delivered?

However, there are some limitations to using economic growth as a measure of development. For example, economic growth does not necessarily lead to reductions in poverty or inequality. In some cases, economic growth can exacerbate these problems. Additionally, economic growth does not always translate into improvements in other aspects of development, such as health or education. In some cases, economic growth can lead to deterioration in these areas.

Structural theory

Structural change theory is a theory that looks at how economies change and develop over time, focusing on the transformation of economic structures. Therefore, it majors on how the leading forms of the economy may influence interest levels and affairs. An economy’s system of dynamic endowments develops from one stage to another. Economies believe that the ideal industrial structure in any economy should be independent in different stages of development. Economists use this theory to study the effect because it can help to explain why some countries develop faster than others and why some regions within countries experience more economic growth than others. Structural change theory emphasizes the importance of technology, investment, and trade in driving economic development. Income growth relies on increasing labor productivity via improving industrial structure from labor-intensive to capital-intensive organizations. In addition, each stage of development in an economy is along the range of little income agricultural economy to a higher income position as far as development is concerned. In addition, this approach considers that every stage of the development market is a fundamental instrument for the best allocation of resources for economic development.

Human capital theory

The human capital theory is a theory that emphasizes the importance of investments in education and health as critical drivers of economic development. Economists use this theory to study effect because it can help to explain why some countries develop faster than others as it accentuates how the level of technology, as well as enlightenment, improves the level of productivity and the competence of the workers through enhancing the status of a cognitive store of economically creative human proficiency. Human capital theory suggests that countries with higher levels of human capital will tend to grow faster than those with lower levels. This theory also highlights the state’s role in promoting or hindering economic development. One advantage of using human capital theory to study evolution is that it can help to explain why some countries develop faster than others. For instance, a country with higher technology, education, and problem-solving skills tends to grow faster than less (Ishida, 2015). This is because human labor is an essential factor of production, and it’s through the laborers that the economy grows faster since the country requires a sufficient output of goods and services. This, in turn, increases the GDP of the country. This theory can also help to understand why some regions within countries experience more economic growth than others.

Poverty alleviation

Development in an economy is the most influential instrument in decreasing poverty and increasing the quality of life in progressing countries. Poverty alleviation is a set of stages undertaken by the economic and humanitarian means to reduce poverty in a nation. This approach is a crucial concern of development economics, as the goal is to find ways to reduce poverty and improve living standards in developing countries. Healthy growth and job creation openings increase the incentives for people to invest in educational facilities through educating young people, sprouting the group of entrepreneurs, and later leading to the development of the economy. One advantage of using poverty alleviation to study development is that it can help to identify effective interventions for reducing poverty. This can be done through data analysis and impact evaluations. Another advantage of this approach is that it can help to raise awareness about poverty and its causes.

In developing countries, poverty alleviation is often hampered by a lack of resources, political instability, and corruption. Additionally, many developing countries have large informal economies, making it difficult to target interventions. Nonetheless, there have been some successes in poverty alleviation in developing countries, such as China and India.

Development Economic Theory

Development economics can be defined as the study of how a developing country may become more financially fit. Economists focus on the economic factors that contribute to the development of a particular region or country. Economies major in developing policies that can be used to improve domestic and world policy. This approach associates product with national economic growth and perceives the nation as the primary agent. A disadvantage of using the development economics approach to study development is that it can be challenging to identify the causal relationships between economic policies and development outcomes. Additionally, this approach can be resource-intensive, requiring data collection and analysis.

Income inequality approach

The income inequality approach looks at the country’s distribution of income and wealth. Income dispersal measures are the stocks of the domestic revenue received by every quintile and the Gini Index. Economies tend to study the gap between the well-off people and the poor to identify the level of wealth distribution, as the higher the opening, the lower the level of economic growth. This approach is helpful for economists because it can help to identify which groups within a country are benefiting from economic growth and which groups are being left behind. Additionally, this approach can help identify policies that may effectively reduce inequality (Naudé, 2010). Massive inequality breaks trust and social unity, which demoralizes investments in the country. For example, it can be challenging to measure income and wealth accurately. Additionally, this approach does not always consider other factors contributing to inequality, such as discrimination. Despite these limitations, an income inequality approach is still helpful for economists to use when studying development.


In conclusion, in developing countries, economists often use the development economics approach to study development. This is because this approach takes steps to ensure a stable financial state in a country. It can help to identify the policies and interventions that are most effective in promoting economic growth and development. Additionally, this approach can be resource-intensive, requiring data collection and analysis.


Ishida, H. (2015). The effect of ICT development on economic growth and energy consumption in Japan. Telematics and Informatics32(1), 79-88.

Naudé, W. (2010). Entrepreneurship, developing countries, and development economics: new approaches and insights. Small business economics34(1), 1-12.


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