WHAT IS ECONOMIC DEVELOPMENT ?

 WHAT IS ECONOMIC DEVELOPMENT ?

Economic development is a fundamental goal of any nation. “Economic development” is the process of lifting a nation’s per capital consumption, production and income so that its people can enjoy the benefits of improved material wellbeing. The term economic development is comprehensive in its scope as compared to economic growth. The term ‘economic development signifies both economic growth as well as structural change in the economy. It is growth plus structural changes. Thus the term economic growth signify only rise in real national and per capita incomes. Whereas the term economic development is the signification of rise national income and per capita incomes along with the following structural changes in the economy.

1)   Changing occupational structure:
   
   In the course of economic development. Its occupational structure undergoes a change. As the level of economic development rises, the percentage shares of labor working in primary sector (farming fishing mining food stuffs etc). Begins to decline, whereas the percentage share of working population in secondary, sector (manufacturing portion of the economy) increases.

2)   Changing sect oral structure of national output: 

    In the process of economic development. There takes place a visible change in the relative contributions of primary. Secondary and tertiary sector (services and commerce portion of an economy such as trade transpiration finance etc) in the generation of national output. The % share of primary sector in the national output falls and the share of secondary and tertiary sectors gradually goes up.

3)   Changing structure of industrial production: 

   In the course of economic development industrialization takes place in the country. The proportional of capital goods in the total industrial output rises and that of consumer goods declines.

4)   Changing structural of foreign trade:
   
   As the country develops economically, the share of primary goods in the total exports decline and that of the manufactured capital goods goes up. Likewise the share of consumer goods in total import falls and those of raw material capital goods rises.

5)   Technological progress:

   In the development process, there is a technical breakthrough in agriculture, transport, industries, communication and other sectors of the economy. The traditional techniques of production gradually give way to science based automated techniques.

6)   Social, institutional changes: 

   With the development of an economy, there is general urbanization and the adoption of modern methods of thinking acting producing and consuming. There are changes in behavioral, institutional and organizational factors. The propensities to undertake risk, innovations and investment become sharper.

Summing up:

we can say that economic growth and economic development go side by side. Economic development to an advanced country means a contribution or acceleration of existing rates of economic growth. For a developing country, it means the rate of expansion which can move a developing country from the state of under development to the state of development through the changes in the technical and institutional arrangement. Whatever may be the objectives or goals of development, the essence of economic development, however, remains, rising per capita income, elimination of poverty, grater employment opportunities, lessening income inequalities and more-important development of physical quality of life such as education, health life expectancy etc. etc.

What are the Rights, Duties and Liabilities of a Partner in a Partnership Firm?

The Partnership Deed contains the mutual rights, duties and obligations of the partners, in certain cases, the Partnership Act also makes a mandatory provision as regards to the rights and obligations of partners. When there is no Deed or the Deed is silent on any point, :ne rights and obligations as provided in the Partnership Act shall apply.

    1.     Rights of a Partner:

The rights of a partner are as follows:

i. Right of the partner to take part in the day-to-day management of the firm.

ii. Right to be consulted and heard while taking any decision regarding the business.

iii. Right of access to books of accounts and call for the copy of the same.

iv. Right to share the profits equally or as agreed upon by the partners.

v. Right to get interest on capital contributed by the partners to the firm.

vi. Right to avail interest on advances paid by the partners for business purpose.

vii. Right to be indemnified in respect of payment made or liabilities incurred or for protecting the firm from losses.

viii. Right to the use of partnership property exclusively for partnership business only not himself.

ix. Right as agent of the firm and implied authority to bind the firm for any act done in carrying the business.

x. Right to prevent admission of new partners/expulsion of existing partners.

xi. Right to continue unless and otherwise he himself cease to become partner.

xii. Right to retire with the consent of other partners and according to the terms-and conditions of deed.

xiii. Right of outgoing partner/legal heirs of deceased partner.

     2.   Duties of a Partner:

The duties of a partner are as follows:

i. To carry on the business to the greatest common advantage:

Every partner is bound to carry on the business of the firm to the greatest common advantage. In other words, the partner must use his knowledge and skill in the conduct of business to secure maximum benefits for the firm.

ii. To be just and faithful to each other:

Every partner must be just and faithful to other partners of the firm. Every partner must observe utmost good faith and fairness towards other partners in business activity.

iii. To render true accounts:

Every partner must render true and proper accounts I his co-partners. Each and every entry in the books must be supported by vouchers and di explanations if demanded by other partners.

iv. To provide full information:

Every partner must provide full information of £ activities affecting the firm to the other co-partners. No information should be concealed, kept secret.

v. To attend diligently to his duties:

Every partner is bound to attend diligently to duties in the conduct of the business of the firm.

vi. To work without remuneration:

A partner is not entitled to receive any kind remuneration for taking part in the conduct of the business. But in practice, the working partners are generally paid remuneration as per agreement, so also commission in some case.

vii. To indemnify for loss caused by fraud or willful neglect:

If any loss is caused to the firm because of a partner's willful neglect in the conduct of the business or fraud commit by him against a third party then such partner must indemnify the firm for the loss.

viii. To hold and use partnership property exclusively for the firm:

The partners must hold and use the partnership property exclusively for the purpose of business of the firm not for their personal benefit.

ix. To account for personal profits:

If a partner derives any personal profit from partnership transactions or from the use of the property of the firm or business connection the firm or the firm's name, he must account for such profit and pay it to the firm.

x. Not to carry on any competing business:

A partner must not carry on competing business to that of the firm. If he carries on and earns any profit then he must account for the profit made and pay it to the firm.

xi. To share losses:

It is the duty of the partners to bear the losses of the firm. ' partners share the losses equally when there is no agreement or as per their profit share ratio.

xii. To act within authority:

Every partner is bound to act within the scope of authority. If he exceeds his authority and the firm suffers from any loss, he shall have compensate the firm for such loss.

xiii. Duty to be liable jointly and severally:

Every partner is jointly and individual liable to the third parties for all acts of the firm done while he is a partner.

xiv. Duty not to assign his interest:

A partner cannot assign or transfer his partner interest to an outsider so as to make him the partner of the firm without the consent of other partners. However, he can assign his share of the profit and his share in the assets the firm where the assignee shall not be entitled to interfere in the conduct of the business

3. Liabilities of a Partner to Third Parties:

The following are the liabilities of a partner to third parties:

i. Liability of a partner for acts of the firm:

Every partner is jointly and severally liable for all acts of the firm done while he is a partner. Because of this liability, the creditor of the firm can sue all the partners jointly or individually.

ii. Liability of the firm for wrongful act of a partner:

If any loss or injury is caused to any third party or any penalty is imposed because of wrongful act or omission of a partner, the firm is liable to the same extent as the partner. However, the partner must act in the ordinary course of business of the firm or with authority of his partners.

iii. Liability of the firm for misutilisation by partners:

Where a partner acting within his apparent authority receives money or property from a third party and misutilises it or a firm receives money or property from a third party in the course of its business and any of the partners misutilises such money or property, then the firm is liable to make good the loss.

iv. Liability of an incoming partner:

An incoming partner is liable for the debts and acts of the firm from the date of his admission into the firm. However, the incoming partner may agree to be liable for debts prior to his admission. Such agreeing will not empower the prior creditor to sue the incoming partner. He will be liable only to the other co-partners.

v. Liability of a retiring partner:

A retiring partner is liable for the acts of the firm done before his retirement. But a retiring partner may not be liable for the debts incurred before his retirement if an agreement is reached between the third parties and the remaining partners of the firm discharging the retiring partner from all liabilities. After retirement the retiring partner shall be liable unless a public notice of his retirement is given. No such notice is required in case of retirement of a sleeping or dormant partner.

MARSHALL’S WELFARE DEFINITION OF ECONOMICS

MARSHALL’S WELFARE DEFINITION OF ECONOMICS.

Alfred Marshall, a pioneer neoclassical economist, reoriented Economics towards the study of mankind and provided economic science with a more comprehensive definition. Marshall, in his famous book ‘Principle of Economics’ published in 1890, defines economics as follows:

  "Political Economy or Economics is a study of mankind in the ordinary business of life. It examines that part of individual & social action which is most closely connected with the attainment & with the use of material requisites of well-being". 

 This definition clearly states that Economics is on the one side a study of wealth and on the other and more important side “a part of the study of man”. Marshall’s followers like Pigou, Cannon and Baveridge have also defined Economics in terms of material welfare.

  Features of Marshall’s Definition:

The Marshall’s definition of Economics has the following main features:

 (1) Wealth is not the be-all and end-all of economic activities:

           Economics does not regard wealth as the be-all and the end-all of economic activities. Wealth is sought for promoting human welfare. Hence, wealth is only a means to the fulfillment of an end which is human welfare. Thus, wealth is relegated to a secondary place.

 (2) Study of an ordinary man:

            Economics is not concerned with what is called in Economics ‘economic man’, i.e., a man whose only motive is to acquire wealth for its own sake and who is not influenced by human considerations in the pursuit of wealth. Rather, Economics deals with ordinary men and women who are swayed by love, affection and fellow-feelings and not merely motivated by the desire to get maximum monetary advantage.

  (3) Economics is a social science:

              Economics is a social science and not one which studies isolated individuals or Robinson Crusoes. Economics study people living in society influencing other people and being influence by them.

(4) Economics does not study all activities of man:

              Economics does not study all the activities of man. It is concerned with those actions which can be brought directly or indirectly with the measuring-rod of money. Marshall clearly explains that economic activity is different from other activity. For example, If a student visits a friend who is ill, it is a social activity, If a person give his vote in an election, it is a political activity. If a person goes to church/temple it is a religious activity. Marshall says that economic activity is different from the above mentioned activities. A farmer going to the field or a worker going to the factory to work is an economic activity—they are working to earn money. With that money they will buy things to satisfy their wants. In other words, economics deals with wants, efforts and satisfaction. In the words of Marshall, "man earns money to get material welfare." Marshall gives importance to welfare and man. As such this definition came to be called the welfare definition.

(5) Study of material welfare:

            Economics is concerned with the ways in which man applies his knowledge and skill to the gifts of nature for the satisfaction of his material welfare. Economics studies only ‘material requisites of well-being’ or causes of material welfare. For a long time, the definition of economics given by Alfred Marshall was generally accepted. It enlarge the scope of economics by emphasizing the study of wealth and man rather than wealth alone. However, Marshall’s definition was criticized by Lionel Robbins. In his book “Nature and Significance of Economics Science” Robbins gave a critical review of the welfare definitions of economics. These criticisms are discussed below.

  Criticism of Marshall’s Welfare Definition:

(1) Classifications and Impractical:

          Robbins did not accept Marshall’s definition as being classification because it makes a distinction between material and non-material welfare and says that Economics is related only with material welfare. Robbins does not think it right for the economists to confine their attention to the study of material welfare, because in the actual study of economic principles, both the ‘material’ and ‘immaterial’ are taken into account.

(2) Narrow down the scope of economics.

         According to Robbins, the use of the word “material” in the definition of economics considerably narrows down the scope of economics. There are many things in the world which are not material but they are very useful for promoting human welfare. For example, “the services of doctors, lawyers, teachers, dancers, engineers, professors etc., satisfy our wants and are scarce in supply”. If we exclude these services and include only material goods, then the sphere of economics study will be very much restricted.

(3) Relation between economics and welfare.

           The second objection raised by Robbins on welfare definition is on the establishment of the relation between economics and welfare. According to him, there are many activities which do not promote human welfare, but they are regarded economic activities, e.g., the manufacture and sale of alcohol or opium, etc. Here Robbins says, “Why talk of welfare at all? Why not throw away the mask altogether”.

(4) Welfare is a vague concept.

           The third criticism raised by Robbins was on the concept of “welfare”. In his opinion welfare is a vague concept. It is purely subjective. It varies from man to man, from place to place and from age to age. Moreover, Robbins questioned the use of a concept which cannot be quantitatively measured and on which two persons cannot agree as to what is conductive to welfare and what is not. For example, the manufacturing and sale of guns, tanks and other warheads, the production of opium, liquor etc. are not conducive to welfare but these are all economics activities. Hence, these cannot be excluded from the study of economics.

 (5) It involves value judgment

          . Finally, the word “welfare” in Marshall’s definition involves value judgment and brought Economics to the realm of ethics. Whereas, according to Robbins economics is neutral as regards ends. It is not supposed to be its function to pass moral judgments and say what is good and what is bad.