We use the word ‘development’ often in our daily lives usually to refer to the progress in a particular field or a segment of people, like rural development, social development, educational development, women and children development, etc. Whenever the economic activities in a country expand, it is called economic development. However, the process of economic development is a complex phenomenon and not easy to define.

The term ‘process’ here refers to the operation of the forces that bring about changes in supply of factors of production and, in the structure of demand for the products. Changes in factor supply take place due to the discovery of additional resources, education and skill development, capital accumulation, population growth, adoption of better techniques of production, etc. Demand for products changes due to change in size and composition of population; level and distribution of income; tastes etc. These changes contribute to an increase in national income.