Development is a very contentious word.  Is it a process, a progression along some dimension(s), where some countries and regions are farther advanced than others?  Or is it a condition, which some countries and regions have at the expense of others?  Is economic growth central to the process or the condition of development?  Or are social and political institutions the key indicators and causes of development?  Are there international actions that result in development or the lack of development in some places?  Or is development largely determined by characteristics internal to a country or sub-national region?
 

extensive economic growth:  increase in the total size of a territory's economy.

intensive economic growth:  increase in the size of a territory's economy, per person.

economic development:  "the integration of an economy's productive resources and markets" [Hanink, p. 406];  change in the economic structure of a territory;  an increase in the range and value of economic activity conducted within the territory.
Elements of economic structure include the economic institutions (markets, labor institutions, financial institutions, etc.), the mix of sectors in the economy, the mix of sectors in the economic base, and the mix of occupations in which people are engaged.

development:  a historical process that encompasses the entire economic and social life of a nation, resulting in change for the better.  Development is related to, but not synonymous with, economic growth [Stutz & deSouza, p. 562].
 

CAUSES  OR  ATTRIBUTES  OF  INTENSIVE  ECONOMIC  GROWTH

Increased use of territorial factors

• increased labor force participation rate, because of changing age structure (lower dependency ratio) and changed social institutions (to encourage or allow greater participation by all adults)
• increase in the availability of capital and infrastructure to allow access to and use of natural and human resources

• access to improved factors (higher-grade raw materials, enhanced land, better-fed and better-educated people)
• increased proportion of scarce factors (labor, capital, land:  whatever is relatively scarce and thus whose addition can have the greatest marginal impact on outputs)
• technological change in the ways that factors are used
• mobility of people and factors from less productive regions and sectors to more productive regions and sectors
• increased scale of production
• increased specialization according to comparative advantage

Demographic transition
Recall that the demographic transition is an empirical regularity of demographic change in a territory.

• Recall that the reasons for falling death rates include diffusion of improved nutrition and public health measures;  and
• the reasons for falling birth rates include cultural and economic change.
• Recall that one result of lower birth and death rates is a reduction in the dependency ratio from the middle two stages of the transition.

Increases in domestic value added  ("Development Stages")
Some countries and regions have increased per capita incomes by processing  more of their key resources before export:  exporting finished lumber (a product of manufacturing, or secondary activity) rather than raw logs (a product of forestry, or primary activity);  exporting simple machinery or ships rather than basic steel;  designing and exporting computers and operating systems rather than assembling semiconductor chips.   The result is increased complexity in the local economy,  higher export-base multipliers, and less dependence on relatively raw exports that (usually) face greater fluctuations in demand and price.
 

Sectoral change
Stutz and deSouza  Figure 12.3 illustrates a striking empirical regularity:  a correspondence between national per capita incomes and the proportions of employed people in primary (from the earth:  mining, fishing, forestry, agriculture), secondary (fabricated or manufactured products), and tertiary (services, in which the primary production is not the fabrication of a physical product) economic sectors.  The higher the per capita income of a nation, the smaller the proportion of employment in primary and secondary sectors, and the higher the proportion in tertiary sectors.  (Note that on page 537, S&deS actually define five broad sectors, including quaternary (high-level services that use information to control or coordinate other economic activity) and quinary (economic activities that produce knowledge or new information:  education, research, product or process development -- see note 1).

Why might this occur?

ECONOMIC  DEVELOPMENT  AS  A  POLARIZING  PROCESS
Rather than a process leading from un-developed to developed, is development a polarizing process, that leads to ever-increasing wealth and self-generated social change in some places, but relative declines in wealth and externally-mandated social change in other places?

Cumulative causation
S&deS's Figure 12.13 encapsulates some of the relationships that would lead to increased productivity and wealth in "core" or "developed" places within a country or across the world:

• higher rates of innovation in places with high incomes, information, education, and infrastructure
• new products for export
• new processes to increase productivity (and thus, per capita incomes)
• economic-base multipliers of the export activity
• larger local market to support specialized services
• economies of agglomeration, which increase the likelihood of innovation
• and the circle continues.

Factor or product mobility
However, if factors of production are mobile, then someone should decide to invest capital in low-wage, capital-scarce settings where the return to capital is greater:  this should increase the capital in these capital-scarce areas, and increase labor productivity and per capita incomes.  People (especially younger people) would migrate from the low-wage areas, reducing the labor surplus in these areas and increasing the supply of labor (and perhaps moderating average wages) in the high-income areas.  Returns, costs, and wages should move toward equalization.

Even if factors are not mobile, if products are mobile (if there is specialization and trade), the demand in the wealthy region for cheaply produced goods in the poorer region should have a multiplier effect in the poorer region, increasing incomes there.

What might prevent this tendency toward equalization?

• Immobility of factors (limits to capital flows, ignorance of investment opportunities outside of the "core," migration restrictions)
• Selective mobility of factors (more skilled and more adventurous or entrepreneurial people who are more likely to migrate from low-wage to high-wage regions;  "brain drain")
• Trade barriers around the wealthy markets
• Increasing economies of agglomeration in the "core" could overwhelm the lower (labor) costs in the "periphery."
• The "cheaply produced goods" in the poorer region could also be of lower quality, seeing little demand in the wealthy region.
• The potential flows of technology from the "core" could be less useful in the lower-skilled, poorer infrastructure settings of the "periphery."

Managing development by managing trade:  Export Promotion

Managing development by improving infrastructure,  factors, and institutions:  Capacity Building
Our discussions of comparative advantage and of competitive advantage noted the importance of acquired resources:

• skilled labor
• physical infrastructure
• high-quality supplier and supporting industries
• institutions that, for example, protect intellectual property rights (to encourage their development and innovation) at the same time they encourage domestic or international competition (to encourage the use of efficient methods and innovation adoption).