Economic growth and economic development are related concepts but have distinct meanings:
Economic Growth
- Definition: Refers to an increase in the real Gross Domestic Product (GDP) or real GDP per capita of an economy over a period of time. It's typically measured as a percentage increase in GDP.
- Focus: Primarily concerned with the quantity of goods and services produced in an economy.
- Scope: Narrower in scope; focuses mainly on the productive capacity of the economy.
- Measurement: Quantifiable and easily measured using metrics like GDP growth rate.
- Indicators: GDP, GNP (Gross National Product), per capita income.
- Impact: Can lead to higher incomes and more jobs, but doesn't necessarily improve the quality of life for everyone.
- Example: A country discovers a large oil reserve and its GDP increases significantly due to oil exports.
Economic Development
- Definition: Is a broader concept that encompasses economic growth plus improvements in various aspects of human well-being, such as health, education, income distribution, poverty reduction, environmental quality, and social justice.
- Focus: Concerned with the quality of life and the overall well-being of a nation's population.
- Scope: Broader in scope; considers economic, social, political, and institutional changes.
- Measurement: More difficult to quantify directly; often measured using composite indices.
- Indicators: Human Development Index (HDI), Gini coefficient (income inequality), poverty rates, literacy rates, life expectancy, access to healthcare, environmental sustainability.
- Impact: Aims to create a more equitable and sustainable society where everyone can benefit from economic progress.
- Example: A country invests in education, healthcare, and infrastructure, leading to increased literacy rates, longer life expectancy, reduced poverty, and a more skilled workforce. This, in turn, fosters sustainable economic growth.
Relationship between Growth and Development
Economic growth is often seen as a necessary but not sufficient condition for economic development. While economic growth can provide the resources needed to improve living standards, it doesn't automatically translate into development. Policies and institutions must be in place to ensure that the benefits of growth are distributed equitably and used to improve the well-being of the population.
A country can experience high economic growth without significant economic development Farah Saed Dheere , if the benefits of that growth are concentrated in the hands of a few, or if it comes at the expense of environmental degradation or social inequality. Conversely, sustainable economic development often requires sustained economic growth to provide the resources for social programs and infrastructure development.
Economic growth refers to the increase in a country’s output of goods and services, typically measured by the rise in GDP (Gross Domestic Product) over time. It focuses on the quantitative aspect of the economy, such as higher production and income levels. Economic development, on the other hand, is a broader concept that encompasses improvements in living standards, education, healthcare, infrastructure, and overall quality of life, alongside economic growth. While growth is about expanding the economy, development focuses on making that growth inclusive and sustainable, addressing inequality and improving the well-being of the population.
Economic growth refers to the increase in a country’s output of goods and services, typically measured by GDP, focusing on quantitative expansion. Economic development, on the other hand, is a broader concept that encompasses improvements in living standards, quality of life, health, education, and social well-being, aiming for sustainable and equitable progress beyond just economic output. While growth focuses on the financial aspect, development addresses social and environmental dimensions of progress.
Economic growth is a the increase in total production and income in a nation. Economic development is the raise in human development index variable in a nation.
Economic growth starts followed by economic development hence growth is a variable of development.
Economic growth is measured by indicators. Economic development is sometimes a judgment about compliance or non-compliance with standards at a certain historical moment.
Economic growth is the increase in the market value of the goods and services produced by an economy over time. It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP (adjusted for inflation). It is the total dollar value of goods and services produced over a specific time period. GDP has been the most widely used measure of the health and progress of an economy, being adopted as the principal policy objective of countless national and international bodies across the world.
Whereas, economic development is a process of targeted activities and programs that work to improve the economic wellbeing and quality of life of a community by building local wealth, diversifying the economy, creating and retaining jobs, and building the local tax base. For many of us, ‘development’ is also a desire for fulfillment of basic needs both for our sustenance (food, cloth, house, employment, health, education, safety, security etc.) as well as for our comfort (better services, communication, freedom, openness, mobility, dignity, etc.). But, there is little uniformity amongst most of us about what constitute the basic and immediate needs!
Economic growth as measured by the growth rate of GDP is simply that. For example, growth of GDP resulting from the exploitation of a natural resource such as petroleum without significate addition of other production may not benefit most of the population.
Economic development includes an expansion of production to several sectors of the economy and an increase in public housing, education, health care as well as an increase in household consumption.
Economic growth refers to an increase in a country’s output (GDP), while economic development encompasses broader improvements in living standards, education, health, and income distribution, making development a more holistic measure of progress.
Economic growth refers to increased output or income, while development includes broader improvements in living standards, education, health, and equality—making development a more holistic measure.