THE IMPACT OF STATISTICS IN ECONOMIC
DEVELOPMENT OF A NATION
INTRODUCTION
WHAT IS STATISTICS: Statistics is the study of the collection, analysis,
interpretation, presentation, and organization of data. In applying statistics
to, e.g., a scientific, industrial, or social problem, it is conventional to
begin with a statistical population or a statistical model process to be
studied. Populations can be diverse topics such as "all people living in a
country" or "every atom composing a crystal". Statistics deals
with all aspects of data including the planning of data collection in terms of
the design of surveys and experiments. When census data cannot be collected,
statisticians collect data by developing specific experiment designs and survey
samples. Representative sampling assures that inferences and conclusions can
safely extend from the sample to the population as a whole. An experimental
study involves taking measurements of the system under study, manipulating the
system, and then taking additional measurements using the same procedure to
determine if the manipulation has modified the values of the measurements. In
contrast, an observational study does not involve experimental manipulation.
Sir Arthur
Lyon Bowley defines statistics as "Numerical statements of facts in any
department of inquiry placed in relation to each other". When census data
cannot be collected, statisticians collect data by developing specific
experiment designs and survey samples. Representative sampling assures that
inferences and conclusions can safely extend from the sample to the population
as a whole. An experimental study involves taking measurements of the system
under study, manipulating the system, and then taking additional measurements
using the same procedure to determine if the manipulation has modified the
values of the measurements. In contrast, an observational study does not
involve experimental manipulation. Two main statistical methodologies are used
in data analysis: descriptive statistics, which summarizes data from a sample
using indexes such as the mean or standard deviation, and inferential
statistics, which draws conclusions from data that are subject to random
variation (e.g., observational errors, sampling variation).[4] Descriptive
statistics are most often concerned with two sets of properties of a
distribution (sample or population): central tendency (or location) seeks to
characterize the distribution's central or typical value, while dispersion (or
variability) characterizes the extent to which members of the distribution
depart from its center and each other. Inferences on mathematical statistics
are made under the framework of probability theory, which deals with the
analysis of random phenomena. A standard statistical procedure involves the
test of the relationship between two statistical data sets, or a data set and a
synthetic data drawn from idealized model. An hypothesis is proposed for the
statistical relationship between the two data sets, and this is compared as an
alternative to an idealized null hypothesis of no relationship between two data
sets. Rejecting or disproving the null hypothesis is done using statistical
tests that quantify the sense in which the null can be proven false, given the
data that are used in the test. Working from a null hypothesis, two basic forms
of error are recognized: Type I errors (null hypothesis is falsely rejected
giving a "false positive") and Type II errors (null hypothesis fails
to be rejected and an actual difference between populations is missed giving a
"false negative").Multiple problems have come to be associated with
this framework: ranging from obtaining a sufficient sample size to specifying
an adequate null hypothesis. Measurement processes that generate statistical
data are also subject to error. Many of these errors are classified as random
(noise) or systematic (bias), but other types of errors (e.g., blunder, such as
when an analyst reports incorrect units) can also be important. The presence of
missing data and/or censoring may result in biased estimates and specific
techniques have been developed to address these problems.
THE ROLE AND RELEVANCE OF STATISTICS IN ECONOMIC DEVELOPMENT
OF UNDER DEVELOPED COUNTRIES
An underdeveloped country is a nation that lags behind most
others in industrialization, education, standard of living, healthcare, life
expectancy and other technological and cultural norms. Rwanda, Somalia and
Ethiopia are all examples of underdeveloped countries. Of the 50 most
underdeveloped countries in the world, 34 of them are on the continent of
Africa. Many things prevent underdeveloped nations from developing. Most of
these countries are extremely poor and do not have the resources to develop
programs to educate and train citizens to farm or perform skilled work.
Malnutrition also lowers life expectancy and renders many incapable of working.
Basic needs such as food, clothing and shelter are scarce. Sometimes, natural
disaster impedes underdeveloped countries even further. Haiti is one such
example. In 2010, the country was devastated by a massive earthquake. Because
the country is so poor, years later, much of the buildings that were destroyed
have still not been rebuilt. A recent study released by the National Bureau of
Economic Research suggests that there is correlation between tropical nations
and underdevelopment by pointing out that of all of the nations in geographic
areas that are considered tropical, only two are not either classified as
underdeveloped or developing. The study suggests that it is too difficult and
expensive to adapt energy resources and to implement the technology used in
temperate climates to tropical climates. In economics, underdevelopment is when
resources are not used to their full socio-economic potential, with the result
that local or regional development is slower in most cases than it should be,
specially compare with the investment and innovation in countries that surround
it. Furthermore, it results from the complex interplay of internal and external
factors that allow less developed countries only a lop-sided development
progression. Underdeveloped nations are characterized by a wide disparity
between their rich and poor populations, and an unhealthy balance of trade.
Symptoms of underdevelopment include lack of access to job opportunities,
health care, drinkable water, food, education and housing.
The idea of underdevelopment has its origin in the German
economists of the 19th century and early 20th, who discussed the idea of Adam
Smith that all regions, professions and populations may progress economically
at a similar pace.
independently of the definition of the term,
underdevelopment is a global problem which is have been attributed to different
factors; but without an agreement on whether or not are influential, as the
race, if they can be considered generic or specific, as the religion, if they
have been created by other Nations, the case of the colonialism, or if on the
contrary would be something of underdeveloped populations, such as blaming
others.
During inflation, such measures are adopted which help to
wipe off the excessive purchasing power and consumer demand. Tax burden is
raised in such a manner as it may not retard new investment. Keeping in view
all facts in mind, it is stated that Statistics plays very significant role for
promoting economic development and stability of under developed countries.
It is illustrated by the following points:
1. Simplification
of Complex Facts:
The foremost purpose of the statistics is to simplify huge
collection of numerical data. It is beyond the reach of human mind to remember
and recollect the huge facts and figures. Statistical method makes it possible
to understand the whole in the short span of time and in a better way.
2. Comparison:
Comparison of data is yet another function of statistics,
simplifying the data; it can be correlated or compared by certain mathematical
question like averages, ratios, coefficients etc.
In this regard Boddingtons opined that the object of
statistics is to enable comparison to be made between past and present results
will a view to ascertain the reasons for changes which have taken place and the
effect of such changes in the future.
3. Relationship between Facts:
Statistical methods are used to investigate the cause and
effect relationship between two or more facts. The relationship between demand
and supply, money-supply and price level can be best understood with the help
of statistical methods.
4. To Mobilize Resources:
The foremost aim of Statistics in underdeveloped countries
is to mobilize resources in the private and public sectors. Generally, the
national income and per capita income is very low due to low rate of savings.
Therefore, the governments of such countries through forced savings pushes the
rate of investment and capital formation which in turn accelerates the rate of
economic development.
It also undertakes the policy of planned investment in the
public sector. Private investments have the favourable effect of increasing
investment, the curtailment of conspicuous consumption and investment in
unproductive channels can help to check the inflationary trend in the economy.
Moreover, these countries face the problem of foreign capital. Thus the remedy
lies in increasing the incremental saving ratio, the marginal propensity to
save through public finance, taxation and forced loans.
To some extent, progressive taxation, heavy duty on luxury
imports, ban on the manufacture of luxury and semi-luxury goods are other
measures which help to mobilize the resources, Therefore, progressive taxation
on windfall gains, on unearned incomes on capital gains, on expenditure and
real estates etc. can go a long way in equitable distribution of wealth.
5. To Accelerate the Rate of Growth:
Statistics helps to accelerate the rate of economic growth
by raising the rate of investment in public as well as private sectors.
Therefore, various tools of Statistics as taxation, public borrowing, deficit
financing and surpluses of public enterprises should be used in a combined
manner so that they may not adversely affect the consumption, production and
distribution of wealth.
In order to achieve balanced growth in different sectors of
the economy, according to Prof. J. Chelliah, the most fruitful line of advance
lies along the path of a balanced development of agriculture and industry. In
short, investment in basic and capital goods industries and in social overheads
is the pillars of economic development in an underdeveloped economy. Thus, top
priority to such investment should be given to accelerate the all round growth
of an economy.
6. To Encourage Socially Optimal Investment:
In underdeveloped countries, Statistics encourages the
investment into those productive channels which are considered socially and
economically desirable. This means optimal investment which promotes economic
development and avoids wasteful and unproductive investment.
In short, aim of the Statistics should be to make investment
on social and economic overheads such as transportation, communication,
technical training, education, health and soil conservation. They tend to raise
productivity and widen the market to enjoy external economies. At the same
time, unproductive investment is checked and diverted towards productive and
socially desirable channels.
7. Inducement to Investment and Capital Formation:
Statistics plays crucial role in underdeveloped countries by
making investment in strategic industries and services of public utility on one
side and induces investment in private sector by giving assistance to new
industries and introduces modern techniques of production. Thus, investment on
social and economic overheads are helpful in increasing the social marginal
productivity and thereby raising the marginal productivity of private
investment and capital formation. Here, optimum pattern of investment can also
go a long way to yield fruitful results of economic development.
Economic development is a most dynamic process which
involves changes in the size and quality of population, tastes, knowledge and
social institutions. Keeping all factors in mind, if social marginal
productivity in socially desirable projects is low, Statistics should be framed
to raise social marginal productivity and to divert resources to that
productive channels where the social marginal productivity is the highest.
8. To Provide more Employment Opportunities:
Since in less developed countries, population grows at a
very fast rate, the aim of Statistics in such countries is to make high doses
of expenditures which are helpful to raise employment opportunities. Generally
under developed economies suffer from unemployment.
The unemployment is of two types:
(I) Cyclical unemployment and
(II) Disguised unemployment.
(I) Cyclical Unemployment and Statistics:
Cyclical unemployment is caused by external factors in
underdeveloped countries. These countries mostly export their raw materials.
When demand for these raw materials falls due to cyclical depression, then
under developed countries also have to face the problem of unemployment in the
primary industries. In order to remove this type of unemployment, the
government may increase public expenditure. But it is not likely to have any
favourable effect. As public expenditure increases, the people may spend on
imports or conspicuous consumption.
Thus, expenditure on imports fails to generate employment in
the country. Expenditure on conspicuous consumption will lead to rise in prices
instead of increasing output and employment. It is because production capacity
in under-developed countries is limited. It is not capable of meeting rising
demand. Thus, the objective of Statistics should be to modernize and diversify
the economy.
It implies that public investment should be directed towards
the setting up of new industries, promoting the growth of private industries
and developing agriculture. Besides, Govt. should provide tax concessions, tax
holidays, bonus and subsidies etc. This will help to reduce the problem of
unemployment.
6. Promotion of Economic Stability:
Still another role played by the Statistics in developing
countries is of maintaining reasonable internal and external economic
stability. Generally, a developing country is prone to the efforts of
international cyclical fluctuations. Such countries mainly export primary
products and import manufactured and capital goods. However, in order to
minimize the effects of international cyclical fluctuations, Statistics should
be viewed from a longer perspective.
REFERENCE
A. G. Frank, “The Development of Underdevelopment,”
Development: Critical Concepts in the Social Sciences (2005).
Report of the Conference of FAO. 4th Session. Washington,
D.C., November 1948.
Underdevelopment of countries - World Problems - Issues
Online
Pearson Education 2000–2012, Afghanistan,
http://www.infoplease.com/ipa/A0107264.html?pageno=1
Mohammad Najeeb Azizi and Shoji Haruna, 2007,What, how and
why it happened to Afghanistan: a study of political economic history of the
early 20th Century,
http://faculty.hope.edu/toppen/pol242/pages/theory/topic1.htm
Afghanistan (12/07)
Topik S, 1987, Historical Perspectives on Latin American
Underdevelopment, society for history
education,http://www.jstor.org/stable/493756
de Janvry A, 1980, The Political Economy of Rural
Development in Latin America: An Interpretation, Oxford University Press,
http://www.jstor.org/stable/10.2307/1238412
May, Julian, and Charles Meth "Dualism or
underdevelopment in South Africa: what does a quantitative assessment of
poverty, inequality and employment reveal?." Development Southern Africa
24.2 (2007): 271-287. Academic Search Complete. EBSCO. Web. 20 Oct. 2009.
May, Julian, and Charles Meth "Dualism or
underdevelopment in South Africa: what does a quantitative assessment of
poverty, inequality and employment reveal?." Development Southern Africa
24.2 (2007): 271-287. Academic Search Complete. EBSCO. Web. 20 Oct. 2009.