Development economics · A module in sixteen lessons
Economic development: theory, measurement and the Indian economy
What is development, how is it measured, and what holds poor countries back? This module covers the topics the exams ask in development economics: the Human Development Index and its family, the demographic transition and the rates that measure it, then the models of the dual economy and migration, strategy, aid, people, the countryside and the environment. Every lesson can be read on its own, with real data, tools you can move and graded past papers: 238 questions so far.
Start at the beginning, or jump to the topic you need.All 16 lessons are ready; the full course is about 12 hours. Each lesson opens with a short answer you can read in a minute, builds the idea with something you can move, and ends with real exam questions solved and a graded set of past papers. Poverty lines, poverty measures and the Lorenz curve are already on the site: see poverty measures, poverty committees and the Gini coefficient and Lorenz curve.
The path
Five parts, sixteen lessons
The parts group the lessons by what they study, not by a story, so they can be read in any order; within Part B, Lewis comes before Harris–Todaro and the strategy lessons come last because they use the ideas of the earlier ones.
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- Part AWhat development is, and how it is measured
Growth against development, capabilities and inequality, and the Human Development Index and the indices built round it.
- 1What is development? Growth, capabilities and inequalityGrowth against development, what GDP per head misses, the capability approach, and inequality and growth from Kuznets to Palma.45 min · 14 past questions
- 2The Human Development Index and its family: HDI, IHDI, GDI, GII, MPI and the SDGsHow the HDI is built, its goalposts and geometric mean, the indices that adjust it for inequality and gender, the poverty indices, and the MDGs and SDGs.45 min · 19 past questions
- Part BTheories and strategies
The dual economy, migration, big-push and trap arguments, development strategy, and aid and foreign capital.
- 3The dual economy: Lewis and Fei–RanisUnlimited supplies of labour, the capitalist and subsistence sectors, the turning point, and Fei and Ranis's three phases.45 min · 17 past questions
- 4Rural–urban migration: the Harris–Todaro modelMigration responds to expected urban wages, and why urban jobs can raise urban unemployment.40 min · 4 past questions
- 5Stages, big push and poverty trapsRostow, Gerschenkron, Rosenstein-Rodan, Nurkse, Leibenstein, Hirschman and Myrdal, and the coordination logic behind them.50 min · 24 past questions
- 6Strategy: structuralism, dependency and the East Asian experiencePrebisch–Singer, dependency theory, import substitution against export promotion, and the Washington Consensus.45 min · 4 past questions
- 7Aid, foreign capital, debt and the Bretton Woods institutionsThe two-gap model, aid effectiveness, FDI, remittances, and what the IMF and World Bank do.45 min · 6 past questions
- Part CPeople
The demographic transition and its measures, human capital, and labour and informality.
- 8The demographic transition and the population debateMalthus and his critics, the stages of the transition, the economics of fertility, the demographic dividend and population momentum.50 min · 17 past questions
- 9Demographic measures: calculating birth, fertility, mortality and dependency ratesCrude and age-specific rates, the total, gross and net reproduction rates, infant and maternal mortality, sex ratio and dependency ratios.45 min · 8 past questions
- 10Human capital, education and healthSchultz and Becker, returns to schooling, signalling, nutrition and productivity, and health as capital.45 min · 7 past questions
- 11Labour, employment and informalityParticipation, worker-population and unemployment rates, informal employment, and employment guarantees.45 min · 21 past questions
- Part DRural development
Land and tenancy, rural credit and microfinance, agriculture, support prices and food security.
- 12Land, tenancy and sharecroppingMarshall's inefficiency claim and Cheung's reply, risk-sharing, interlinked contracts and land reform.45 min · 5 past questions
- 13Rural credit and microfinanceWhy credit markets fail, informal lending, joint liability, the Grameen model and self-help groups.40 min · 12 past questions
- 14Agriculture, MSP and food securityThe Green Revolution, price support and procurement, public distribution and the structural-change puzzle.45 min · 27 past questions
- Part EEnvironment and sustainability
The commons, property rights and externalities; sustainability, green accounts and climate policy.
- 15The commons, property rights and externalitiesHardin, Ostrom, Coase and Pigou, and common-pool resources against public goods.40 min · 33 past questions
- 16Sustainable development and climate policyWeak and strong sustainability, the environmental Kuznets curve, Hotelling's rule, green accounts and carbon pricing.45 min · 20 past questions
Where to start
A two-minute check
One question from each lesson that is ready. Your first wrong answer tells you where to begin; get them all and go straight to the cheat sheet.
Question 1 of 16
Two people have incomes of 100 and 400. The Atkinson index with ε = 1 is
Where the marks are
Topic map: how often each topic is asked
The bars count past questions on each topic in the question bank, from JNU, Hyderabad, CUET-PG, UGC NET, IIT JAM, GATE and the Delhi School entrance. The counts are approximate: they come from keyword searches over the whole bank with duplicates removed, a question can fall in two rows, and some stems only mention a term. Read them as a guide to emphasis, not as a tally.
Population and demography58
Environment and resources54
HDI family and the capability approach49
Labour measures and informality38
Theories and strategies of development38
Aid, FDI and international institutions29
Agriculture, MSP and food policy23
Dual economy and migration20
MGNREGA and workfare16
Human capital, education, nutrition16
Land, tenancy and sharecropping15
Rural credit and microfinance10
Inequality beyond the Gini7
Already built elsewhere on the site: poverty measurement (about 37 questions) and the Lorenz curve and Gini coefficient (about 29).
Lessons by topic: Population and demography (Lesson 8, Lesson 9); Environment and resources (Lesson 15, Lesson 16); HDI family and the capability approach (Lesson 1, Lesson 2); Labour measures and informality (Lesson 11); Theories and strategies of development (Lesson 5, Lesson 6); Aid, FDI and international institutions (Lesson 7); Agriculture, MSP and food policy (Lesson 14); Dual economy and migration (Lesson 3, Lesson 4); MGNREGA and workfare (Lesson 11); Human capital, education, nutrition (Lesson 10); Land, tenancy and sharecropping (Lesson 12); Rural credit and microfinance (Lesson 13); Inequality beyond the Gini (Lesson 1).
History
Two centuries of development ideas in one scroll
Each entry gives the year the idea or institution first appeared, and links to the lesson that teaches it. The dates are the ones on the lessons’ own history cards, where each was checked against the paper’s or the institution’s own record.
- 1798Thomas MalthusAn Essay on the Principle of Population: population grows faster than food unless checked.Lesson 8: Demographic transition
- 1890Alfred MarshallPrinciples of Economics: why a sharecropper keeping part of the crop supplies too little effort.Lesson 12: Land and tenancy
- 1920Arthur PigouThe Economics of Welfare: a tax equal to the external damage.Lesson 15: The commons
- 1931Harold Hotelling“The economics of exhaustible resources”: the net price rises at the rate of interest.Lesson 16: Sustainability
- 1943Paul Rosenstein-Rodan“Problems of industrialisation of Eastern and South-Eastern Europe”: the big push.Lesson 5: Big push and traps
- 1944–47Bretton WoodsThe IMF and the World Bank are created.Lesson 7: Aid and capital
- 1953Ragnar NurkseProblems of Capital Formation: the vicious circle of poverty and disguised unemployment.Lesson 5: Big push and traps
- 1954W. Arthur Lewis“Economic development with unlimited supplies of labour”: the dual economy.Lesson 3: Lewis and Fei–Ranis
- 1955Simon Kuznets“Economic growth and income inequality”: the inverted U.Lesson 1: What is development?
- 1956W. W. Rostow“The take-off into self-sustained growth”, and the stages of growth in 1960.Lesson 5: Big push and traps
- 1958Albert HirschmanThe Strategy of Economic Development: linkages and unbalanced growth.Lesson 5: Big push and traps
- 1960Ronald Coase“The problem of social cost”: property rights and bargaining.Lesson 15: The commons
- 1961Theodore Schultz“Investment in human capital”; Gary Becker’s Human Capital followed in 1964.Lesson 10: Human capital
- 1961John Fei and Gustav Ranis“A theory of economic development”: three phases of the dual economy.Lesson 3: Lewis and Fei–Ranis
- 1962Rachel CarsonSilent Spring.Lesson 16: Sustainability
- 1968Garrett Hardin“The tragedy of the commons”.Lesson 15: The commons
- 1969Michael TodaroA model of rural–urban migration and urban unemployment; Harris and Todaro (1970).Lesson 4: Harris–Todaro
- 1973Michael Spence“Job market signaling”: education as a signal.Lesson 10: Human capital
- 1973Keith HartThe informal sector, from a study of urban Ghana.Lesson 11: Labour and informality
- 1974Joseph Stiglitz“Incentives and risk sharing in sharecropping”: risk against incentives.Lesson 12: Land and tenancy
- 1981Amartya SenPoverty and Famines: entitlements; and Development as Freedom in 1999.Lesson 1: What is development?
- 1981Joseph Stiglitz and Andrew Weiss“Credit rationing in markets with imperfect information.”Lesson 13: Rural credit
- 1987Brundtland CommissionOur Common Future: sustainable development defined.Lesson 16: Sustainability
- 1989Murphy, Shleifer and Vishny“Industrialization and the big push”: the modern coordination argument.Lesson 5: Big push and traps
- 1990UNDPThe first Human Development Report and the first HDI (a geometric mean from 2010).Lesson 2: HDI and its family
- 1990Elinor OstromGoverning the Commons.Lesson 15: The commons
- 1995Grossman and Krueger“Economic growth and the environment”: the environmental Kuznets curve.Lesson 16: Sustainability
- 2000Besley and BurgessLand reform, poverty reduction and growth in Indian states.Lesson 12: Land and tenancy
- 2005Parliament of IndiaThe National Rural Employment Guarantee Act (repealed from 30 June 2026).Lesson 11: Labour and informality
- 2013Parliament of IndiaThe National Food Security Act.Lesson 14: Agriculture and MSP
- 2015United NationsThe 2030 Agenda and the Sustainable Development Goals.Lesson 2: HDI and its family
The debates
The great arguments
Development economics advanced by argument. Eight of them, each with the lesson where it is set out.
Growth or development?Is a richer country a more developed one? Seers, Sen and the capability approach against income per head.Lesson 1Does labour move to where it is wanted?Lewis’s unlimited supply of labour against Harris and Todaro’s expected wage and urban unemployment.Lesson 4Big push, or do poor countries escape by themselves?Rosenstein-Rodan, Nurkse and the coordination models, against the evidence on poverty traps.Lesson 5Protect or open?Import substitution, East Asia’s export push and the Washington Consensus.Lesson 6Does aid work?Burnside and Dollar’s policy condition against the re-estimates, and Sachs against Easterly.Lesson 7Is population a problem or a resource?Malthus, Boserup and Simon, and the demographic dividend.Lesson 8Is sharecropping inefficient?Marshall’s tax on effort against Cheung’s contract terms and Stiglitz’s risk sharing.Lesson 12Can the commons be saved?Hardin’s tragedy and Pigou’s tax against Coase’s bargaining and Ostrom’s community rules.Lesson 15
Revise
Cheat sheet: measures and formulas
The formula, what it is for, and the trap examiners set on it. Each row links to the lesson that teaches it.
| Idea | Formula | Use it for | The trap |
|---|---|---|---|
| Inequality measures | Inequality beyond the Gini: Atkinson, Theil and Palma | All obey the Pigou–Dalton principle: a progressive transfer lowers inequality. A larger ε puts more weight on the poor. | |
| HDI | Average achievement in health, education and income | Geometric mean since 2010; GNI, not GDP; income in logs; goalposts 20–85, 0–18, 0–15, $100–$75,000. | |
| IHDI | The HDI after discounting for inequality | A is the Atkinson measure with ε = 1. Loss = 1 − IHDI/HDI. | |
| GDI | Gap in human development between women and men | A ratio near 1 is equality; the GII is a different, loss-type index from 0 to 1. | |
| MPI | Multidimensional poverty from household deprivations | Poor if deprived in at least one third of weighted indicators; H is the headcount, A the intensity. | |
| Lewis model | Modern-sector employment while labour is in unlimited supply | Wage is fixed until the turning point; reinvested profit is the engine; surplus means zero marginal product. | |
| Fei–Ranis | Phases of the traditional sector as labour leaves | Shortage point ends phase 1; commercialisation point ends phase 2; agriculture must supply a surplus. | |
| Harris–Todaro | Migration equilibrium and urban unemployment | Expected wage, not the actual one; urban job creation can raise unemployment. | |
| Big push threshold | Share of firms that must modernise for it to pay | Below x* the economy sinks to the trap; above it modernising spreads. | |
| Effective protection | Protection of value added, allowing for input tariffs | It is not the tariff on the good; input tariffs reduce it. | |
| Two-gap model | Foreign capital needed to reach a growth target | The larger gap decides; the trade gap can bind even if saving is enough. | |
| Natural increase | Population growth without migration | Divide by 10, not 100; doubling time is about 70/r. | |
| Crude birth rate | Births per 1,000 people | Base is the total population, so it falls when the age structure ages. | |
| General and age-specific fertility | Fertility among women of reproductive age | The base is women, not the population. | |
| Total fertility rate | Births per woman at current age-specific rates | Multiply by 5 for five-year groups. Replacement is about 2.1. | |
| GRR and NRR | Daughters per woman, and surviving daughters per woman | NRR = 1 is exact replacement. | |
| IMR and MMR | Infant and maternal mortality | Both use live births as the base; the MMR is formally a ratio. | |
| Dependency ratio | Dependants per 100 of working age | Young and old ratios are the two parts. A percentage change in the ratio is not the percentage-point change. | |
| Sex ratio | India's Census convention | Other sources use males per 100 females. | |
| Mincer and the return to schooling | Earnings gain from schooling, and its rate of return | r is a private return, and e^r − 1 is the exact rise. Forgone earnings are part of the cost. | |
| LFPR, WPR and unemployment rate | Measuring participation, employment and unemployment | The unemployment rate has the labour force as its base; discouraged workers lower it. | |
| Best tenant's share | Effort and the surplus-maximising share in a tenancy | Fixed rent puts all risk on the tenant; the best share falls with risk aversion and variance. | |
| Break-even interest rate | The lowest rate a lender can charge; repayment under joint liability | Default raises the rate by more than the default share; joint liability assumes independent projects. | |
| MSP and procurement | What a support price above the market price costs | Only an above-market floor binds; consumers lose as well as the budget. | |
| Tragedy of the commons | Herd size with n herders on a pasture that yields a − N per animal | A common-pool resource is rival and non-excludable; a public good is non-rival. Ostrom shows managed commons survive. | |
| Pigouvian tax and permits | Correcting an external cost; reaching a target at least cost | The tax uses the damage at the efficient output, not at the market output. Permits equalise marginal abatement costs. | |
| Coase theorem | Private solutions to externalities | The right changes who pays, not the efficient outcome; assumes no income effect and full information. | |
| Adjusted net saving | Whether a country is adding to or running down its total capital | A flow; education is added; biodiversity loss is not counted; it signals unsustainability when negative. | |
| Hotelling's rule | The price path of an exhaustible resource | The rate applies to the price net of extraction cost; a higher rate lowers the starting price and brings exhaustion sooner. |
Real questions
Practise across the module
Hyderabad80
UGC NET75
JNU35
CUET-PG23
GATE15
IIT JAM8
Questions placed in the lessons so far, by exam.
Hyderabad and UGC NET ask definitions, matching lists and who-said-what; JNU asks the economics behind them, such as why crude death rates mislead; GATE and IIT JAM ask calculations from a small table. CUET gives short factual and matching questions. Delhi School questions above Easy are in a card on the lesson they belong to, in Lessons 1 and 15.
Foundation
Definitions, components of indices, who said what, and one-step calculations. Most Hyderabad and CUET questions sit here.
73 questionsPractise →
Standard
Calculations from definitions, statement and matching questions, up to JNU, IIT JAM, GATE and UGC NET level.
163 questionsPractise →
These are questions from the TestStop bank. A free account answers 10 a day, each with its worked solution; All-Access opens every set with no daily limit.
Quick answers
Frequently asked questions
What is development economics?
Development economics studies why some countries are poor, what a good life consists of, and what can be done about it. It covers the measurement of development (the Human Development Index and poverty indices), theories of structural change and migration (Lewis, Harris–Todaro), strategy (import substitution and export promotion), population, human capital, labour, rural institutions (land, credit, agriculture) and the environment.
What is the difference between economic growth and economic development?
Growth is a rise in output, usually real GDP or GDP per head. Development is broader: it includes health, education, freedom and the distribution of the gains. A country can grow without developing if the gains are narrow, and the Human Development Index was built to show the difference. The growth module of this site covers the models of growth; this module covers the rest.
How is the Human Development Index calculated?
The HDI is the geometric mean of three indices between 0 and 1: health (life expectancy at birth, with goalposts 20 and 85 years), education (the average of expected and mean years of schooling, with goalposts 0 to 18 and 0 to 15) and income (the logarithm of gross national income per head in 2021 PPP dollars, between $100 and $75,000). Lesson 2 works an example from the UNDP's technical notes.
What is the demographic transition?
The demographic transition is the shift from high birth and death rates to low ones as a country develops. Death rates fall first, so population grows fast for some generations; birth rates fall later. The change in age structure opens a demographic dividend when the share of the population of working age rises. Lesson 8 covers the stages and the dividend, and Lesson 9 the rates used to measure them.
What is the tragedy of the commons, and how is it avoided?
The tragedy of the commons is the over-use of a resource that is rival but open to all: each user gains the full benefit of taking more and bears only a share of the cost. Remedies are a tax equal to the external damage (Pigou), clear property rights and bargaining (Coase), tradable permits, or rules made and enforced by the users themselves (Ostrom). Lesson 15 works through the pasture example with a calculator.
What is sustainable development?
The Brundtland Commission (1987) defined it as development that meets the needs of the present without compromising the ability of future generations to meet their own needs. Economists measure it with adjusted net saving and distinguish weak sustainability, which keeps the total capital stock intact, from strong sustainability, which keeps critical natural capital. Lesson 16 covers the measures, Hotelling's rule and climate policy.
Are the rural topics of the Indian economy covered?
Lessons 12 to 14 cover tenancy and land reform, rural credit and microfinance, and agriculture, support prices and food security, and Lesson 11 covers labour, informality and the employment guarantee. They give the concepts and the dated facts that exams ask, with sources. Questions that depend on a figure for a particular year are left for the Indian economy pages.
Which topics are asked most often in development economics exams?
Across JNU, Hyderabad, CUET-PG, UGC NET, IIT JAM, GATE and the Delhi School entrance, the most frequent are population and demography, environment and resources, the HDI family, labour measures and informality, and theories and strategies of development. The topic map on this page shows approximate counts from the question bank.
Is each lesson readable without the others?
Yes. Every lesson starts with a short answer to the question its title asks, restates in a primer what it needs from other lessons, and ends with quick answers. The lessons are grouped in five parts, so you can follow a part in order or jump to the topic you need.
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