Economic Development, Level of

Economic Development, Level of

 

the state or stage of the economy (social production) of a country (group of countries, economic region) at a given time. The level of economic development is a general concept, and it is expressed through five groups of indicators. The first group describes the total social product, the material well-being, and the national income per capita. The second describes the structure of social production, that is, the role of industry and agriculture in the economy, the share of the production of capital goods, and the role, size, and rate of development of the most advanced sectors of the economy. The third group relates to the level of employment of the population, considered both quantitatively and qualitatively, while the fourth describes the level of utilization of natural resources, that is, the extent to which a country’s land, power, fuel, and mineral resources are used in the economy. The fifth group deals with the organization and efficiency of social production, that is, the level of labor productivity, the amount of specialization and concentration, and the quality of output. The level of economic development is to be distinguished from economic potential. A small country may have a low economic potential but at the same time may have attained a high level of economic development.

The level and rate of a country’s economic development depend on the progress of the productive forces and production relations, and they are closely linked with the production goals of the society in question. Under capitalism, the law of uneven economic and political development obtains. Certain sectors of the economy, as well as entire countries, develop spasmodically, leading to greater economic competition and political strife between countries. For example, between 1950 and 1973 the national income of the United States increased by a factor of 2.3, while in Japan the figure was 8.8, and in West Germany 3.7. During this same period, industrial output increased by a factor of 2.8 in the United States, 19 in Japan, and 4.8 in West Germany. While the United States had accounted for 54.6 percent of the industrial output of the capitalist world in 1948, the figure had dropped to 40.8 percent by 1972.

Table 1. Basic indicators of the development of the Soviet economy during the period 1913–75
 191319401950196019701975
Gross social product ...............15.18.2214156
Gross national income ...............15.38.8234661
Fixed production assets ...............12.63.38.32030
Total industrial output ...............17.713.04092131
Gross agricultural output ...............11.41.42.23.13.2
Labor productivity in industry ...............13.85.511.118.524.7
Real income of each worker (averaged) in industry and construction, adjusted to account for the elimination of unemployment and shortening of the workday ...............12.75.88.09.4
Real income of each peasant (averaged) ...............12. 3711.2>13

Any rise in the level of economic development in the capitalist countries is held back by economic crises, the militarization of the economy, and chronic underutilization of productive capacity and the labor force. During the crisis that began in 1974, average annual industrial production in Western Europe and the United States had declined by more than 10 percent by mid-1975. The standard of living of the population declined even further and prices of consumer goods rose significantly. According to official data, the number of unemployed in the industrially developed capitalist countries in 1975 was approximately 20 million.

The advantages of the socialist system of social production, such as planned management of the economy, public ownership of the means of production, and the broad participation by the people in government administration, have been clearly demonstrated in the economic competition with capitalism. When socialist construction began in the USSR, the country’s level of economic development was very low as a consequence of World War I and of the Civil War and military intervention (1918–20). The

Table 2. Comparison of basic indicators for the economies of the USSR and USA (USSR, as percentage of USA)
National income
Total in 1950 ...............31.0
in 1975 ...............67.0
Per capita in 1975 ...............~56.0
Industrial output
1913 ...............12.5
1975 ...............>80.0
Electric power production
1913 ...............8.0
1975 ...............49.0
Steel production (smelted) 
1913 ...............15.0
1975 ...............130
Cement production 
1913 ...............13.0
1975 ...............188
Oil production
1913 ...............27.0
1975 ...............119
Cotton textile production 
1913 ...............41.0
1975 ...............166
Volume of capital investment 
1950 ...............30.0
1975 ...............>100.0

majority of factories were destroyed, specialists and skilled workers were scattered, and agriculture was in serious decline. The plan of the State Commission for the Electrification of Russia made it possible to restore the economy in a short time. Of decisive importance in establishing a socialist economy were the industrialization of the country and the collectivization of agriculture. The level of economic development was raised in accordance with five-year plans, which sought to improve the utilization of the country’s natural, material, labor, and financial resources and the economic potential of the country as a whole. Through the process of socialist construction, the material and technical basis for socialism was created; in addition, the levels of economic development of the Union republics and economic regions were equalized through the creation of modern industrial sectors, the introduction of intensive agriculture, and the increase in the number of trained personnel among the national groups.

While industrial production in the USSR as a whole increased by a factor of 131 between 1913 and 1975, output in the Kazakh SSR, for example, increased by a factor of 208; the figure was 227 in the Moldavian SSR, 286 in the Kirghiz SSR, and 266 in the Armenian SSR. In the period of developed socialism, the level of economic development rises with the creation of the material and technical basis for communism. In contrast to conditions in capitalist countries, economic progress in the USSR has been accompanied by a steady improvement in the material and cultural well-being of the people (see Table 1). High and stable rates of growth in the Soviet economy have brought about a steady reduction in the differences between the levels of economic development in the USSR and the United States (see Table 2).

The other countries of the socialist community, most of which were formerly underdeveloped agrarian countries, have also achieved significant success in raising their levels of economic development. In the world socialist system, an objective economic law works to equalize the levels of economic development of the various countries. This equalization is one of the principal advantages that world socialism offers over world capitalism. The Council for Mutual Economic Assistance (COMECON), founded in 1949, has contributed to the growth of the national economies and the equalization of the levels of economic development by expanding the international division of labor and the efficient use of natural resources and qualified personnel. A session of COMECON in 1971 adopted the Comprehensive Program for the Further Extension and Promotion of Cooperation and Development of Socialist Economic Integration Among the Members of the Council for Mutual Economic Assistance. Highly developed industry and intensive agriculture ensure high rates of economic growth for the socialist countries, as seen in the data presented in Table 3 on the national incomes of various socialist countries.

Table 3. Rates of growth of national income in certain socialist countries (as a percentage of the 1950 rate)
 1950196519701975
11952
Bulgaria ...............100391593865
Hungary ...............100216300406
German Democratic Republic ...............100310400521
Poland ...............100280374594
Czechoslovakia ...............100228318421
Rumania ...............1004135991,022
Yugoslavia ...............1001280387502

Per capita national income in the COMECON countries from 1971 to 1974 increased by a factor of approximately 1.3, whereas in the advanced capitalist states the figure was 1.1. From 1971 to 1975, the gross industrial output of the COMECON countries increased by almost 46 percent, whereas for countries in the European Economic Community (EEC) the increase was 21 percent (see Table 4).

The European members of COMECON have far surpassed the EEC countries in per capita production of mineral fertilizers, cotton textiles, sugar, and grain, as well as of many other industrial and agricultural products. The five-year development plans of the USSR and other socialist countries for the period 1975–80 and the long-term plans looking to 1990 envisage further rises in the level of economic development of each country so as to increase the economic progress of all the socialist countries, raise the standard of living, and strengthen the socialist community.

Table 4. Output of basic goods by COMECON and EEC countries
 COMECON countriesEEC countries
1953197419501974
Electric power (billion kilowatt-hours)1351,3011931,041
Coal, calculated on the basis of standard fuel (million tons) ...............355795450268
Oil (million tons) ...............44468210
Steel (million tons) ...............3618548156

The collapse of the colonial system after World War II resulted in the formation of a group of developing countries, a group consisting of former colonies and dependent countries. Per capita national income in these countries is tens of times lower than in the developed capitalist countries. Thus, in the mid-1970s, per capita national income was $65 in Tanzania, $60 in Nigeria, and more than $1,600 in Great Britain. The developing countries are trying to accelerate the rise in the level of economic development by creating an industrial base and increasing efficiency in agriculture. The USSR and other socialist countries are providing large amounts of foreign aid; as a result of their technical assistance, hundreds of modern plants and other facilities have been built. From 1951 to 1975, total industrial output in the developing countries increased by a factor of 6.4, compared with a factor of 3.1 in the advanced capitalist countries.

The oil-producing countries, including Iran, Saudi Arabia, Kuwait, and Libya, occupy a special place. With the fourfold increase in oil prices in 1973, these countries have built up enormous financial reserves, which have enabled them to accelerate industrial development and the development of other economic sectors.

REFERENCES

Marx, K. Kapital, vol. 1. In K. Marx and F. Engels, Soch, 2nd ed., vol. 23.
Lenin, V. I. Razvitie kapitalizma v Rossii. Poln. sobr. soch, 5th ed., vol. 3.
Lenin, V. I. “O lozunge Soedinennykh Shtatov Evropy.” Ibid., vol. 26.
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Lenin, V.I. “Ob edinom khoziaistvennom plane.” Ibid., vol. 42.
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M. N. GORSHKOV

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