Economic development is dependent upon a number of factors such as natural resources, capital human assets, technology, attitude of the people, and political condition in the country. All of the factors which have a strong relating financial growth. There are some Pre_requisites elements for economic development.:
Natural resources comprise the natural environment on the surface of the earth below its crust, in the air and in the ocean. So whatever is available on the earth comes under the category i.e. in the form of minerals, forests, fisheries, rivers, seas, mountains etc. The natural resources provide sound base for the process of economic development. The nature and quantity of natural resources determine the mode of economic development. Simply the existence of natural resource is no more a guarantee of economic development, but it is the utilization of natural resource which is a base for economic development agriculture and industry.
Human behavior is an important factor of economic development. If people of a country are educated, experienced, trained, and skilled and have knowledge of modern technology they can increase rate of economic development. The desire for economic development must be among the people of the country. The economies of Japan, Germany are the good examples of development.
Human capital refers to the productive qualities embodies in the labour force. The productive qualities are education, training, health, skill and nourishment. It is said to have more human capital and greater is the productivity. Having more human capital is similar to have more material capital to work with them.
Capital accumulation or capital formation refers to the process adding to the stock of capital. Most theories of economic development are emphasis that capital accumulation is a fundamental part of the development. So economists agree that a major requirement for development is accumulation of real capital.
Social Overhead Capital
Social overhead capital is also called infrastructure. It may be defined as capital goods used directly or indirectly in the production of goods and services e.g. Roads, Railways, Highways, Communications, Transport, Electric power and research centers.Hence Improved Social Overhead Capital increases economic growth. It provides incentives to the organization for investment.
Social and Religious Institutions
The favorable social and religious institutions promote the economic development of the country. So if these institutions preach contentment with the existing state of poverty and ignorance, the people would not participate in any new programme of development. Similarly if the social set up of the society looks down upon certain professions, it will lead to the wastage of material talent.
Capital and capital Goods
If capital and capital goods exist it will increase the efficiency of labour and natural resources utilized properly. So Increase in modern machinery increases the efficiency factor and as a result development rate goes up.
Means of Transport and Communication
Developed means of transport and communication expand national and international trade. So agriculture and industrial sectors get specialization, increase exchange of goods between rural and urban areas, mobility of labour, organization and extend market for agriculture and industry. Also stimulate balanced growth.
Existence of Organizational Abilities
One basic secret of developed countries is the entrepreneurial class. So the factors of production are coordinated by the organization to produce goods and services. So an intelligent organizer can minimize cost of product, manages production process well and uses modern technology to increase quantity and quality of goods and services
Perfect markets increase the transfer of factors of production to more productive employment. Hence these encourage the capital market and credit facilities widened to the small traders, peasants, and small producers.
Political stability plays an important role in economic development. There should be stable government to implement development programmes. Therefore Political instability shatters the confidence of the people and those persons concerned with industrialization.