Economic development is a complex process. It depends on the levels of technology. It is indeed a process of stepping up the rate of capital formation. But it must be noted that capital, though necessary, is not a sufficient condition of economic development which depends on such non-economic factors as social attitudes, political conditions, human endowments and efficient governance. It is clear now that two types of factors, i.e., a) Economic Factors, and b) The Non-Economic Factors influence the economic development of the country. Economic Factors in the Economic Development such as; Capital Formation, capital-output ratio, marketable surplus of agriculture, conditions in foreign trad, economic system, growth of population and finally, building human capital. It is the task of the economists to study to what extent these factors influence economic development. The various Non-Economic factors and forces also play a vital role in the Economic Development of a country. The non-economic factors provide the requisite social climate in which the seed of economic development can germinate to full bloom. Therefore, it would be unwise to underrate the importance of the sociological and psychological factors as well. Development is not governed in any country by economic forces alone and the more backward the country, the more this is true. The key to development lies in men's minds, in the institutions in which their thinking finds expression and in the play of opportunity on ideas and institutions. Prerequisites of Economic Development: --Institutions or normative complexes, that unanimously accept and follow the rules of conduct. --Values or Ideology that exercises a tremendous influence on behavior. --The nature and type of policies of the government, that is, whether the government wants to promote public sector or private sector or both. --Motives and incentives pertaining to profit/prestige.
