THE IMPACT OF STATISTICS IN ECONOMIC DEVELOPMENT OF A NATION

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.