ECONOMIC GROWTH AND ECONOMIC DEVELOPMENT

Difference Between Economic Growth and Economic Development


Economic Growth refers to the rise in the value of everything produced in the economy. It implies the yearly increase in the country’s GDP or GNP, in percentage terms. It alludes to considerable rise in per-capita national product, over a period, i.e. the growth rate of increase in total output, must be greater than the population growth rate.
Economic Growth is often contrasted with Economic Development, which is defined as the increase in the economic wealth of a country or a particular area, for the welfare of its residents. Here, you should know that economic growth is an essential but not the only condition for economic development.

Definition of Economic Growth

Economic Growth is defined as the rise in the money value of goods and services produced by all the sectors of the economy per head during a particular period. It is a quantitative measure that shows the increase in the number of commercial transactions in an economy.

Economic growth can be expressed in terms of gross domestic product (GDP) and gross national product (GNP), that helps in measuring the size of the economy. It lets us compare in absolute and percentage change, i.e. how much an economy has progressed since last year. It is an outcome of the increase in the quality and quantity of resources and advancement of technology.

Definition of Economic Development

Economic Development is defined as the process of increase volume of production along with the improvement in technology, a rise in the level of living, institutional changes, etc. In short, it is the progress in the socio-economic structure of the economy.
Human Development Index (HDI) is the appropriate tool to gauge the development in the economy. Based on the development, the HDI statistics rank countries. It considers the overall development in an economy regarding the standard of living, GDP, living conditions, technological advancement, improvement in self-esteem needs, the creation of opportunities, per capita income, infrastructural and industrial development and much more.

Key Differences Between Economic Growth and Economic Development

The fundamental differences between economic growth and development are explained in the points given below:
  1. Economic growth is the positive change in the real output of the country in a particular span of time economy. Economic Development involves a rise in the level of production in an economy along with the advancement of technology, improvement in living standards and so on.
  2. Economic growth is one of the features of economic development.
  3. Economic growth is an automatic process. Unlike economic development, which is the outcome of planned and result-oriented activities.
  4. Economic growth enables an increase in the indicators like GDP, per capita income, etc. On the other hand, economic development enables improvement in the life expectancy rate, infant mortality rate, literacy rate and poverty rates.
  5. Economic growth can be measured when there is a positive change in the national income, whereas economic development can be seen when there is an increase in real national income.
  6. Economic growth is a short-term process which takes into account yearly growth of the economy. But if we talk about economic development it is a long term process.
  7. Economic Growth applies to developed economies to gauge the quality of life, but as it is an essential condition for the development, it applies to developing countries also. In contrast to, economic development applies to developing countries to measure progress.
  8. Economic Growth results in quantitative changes, but economic development brings both quantitative and qualitative changes.

Comments

Post a Comment

Popular posts from this blog

Image
        JOBLESS GROWTH  Jobless growth, also known as jobless recovery, occurs when an economy experiences economic growth without a proportional increase in employment opportunities. This phenomenon can have several impacts on individuals, society, and the economy as a whole: 1.     Unemployment: The most direct impact of jobless growth is an increase in unemployment rates. Despite economic expansion, businesses may not be creating enough jobs to absorb the growing labor force, leading to higher levels of unemployment. 2.     Income Inequality: Jobless growth can contribute to income inequality. Those who benefit from economic growth, such as business owners or skilled workers in growing sectors, may experience increased income, while unemployed or underemployed individuals may face declining or stagnant incomes. 3.     Social Unrest: High levels of unemployment and income inequality can lead to social unrest and dissatisfaction. People who feel left behind by economic gr
Read more

Simple Fundas on NATIONAL INCOME

DON'T MISS TO REVISE THE FOLLOWING FUNDAS ON NATIONAL INCOME  National income or domestic income includes only factor incomes;viz., rent,interest,profit and wages. Private income includes factor incomes as well as transfer payments (like old-age pensions or scholarships)granted by the government to the private sector. Private income does not include that part of domestic income which accrues to the government (or from rest of the world ) to the private sector. Personal income does not refer to income of any particular person in the economy.It refers to income of all individuals and households in the economy.Unlike private income,it does not include:            a.undistributed profits (also called corporate saving)            b.corporate profit tax
Read more

PRACTICE QUESTIONS ON NATIONAL INCOME

PRACTICE QUESTIONS ON NATIONAL INCOME One Mark questions. 1. When will the domestic income be greater than the national income? Ans: When the net factor income from abroad is negative. 2. What is national disposable income? Ans.It is the income, which is available to the whole economy for spending or disposal NNP Mp + net current transfers from abroad = NDI 3. What must be added to domestic factor income to obtain national income? Ans. Net factor income from abroad. 4. Explain the meaning of non-market activities Ans. Non marketing activities refer to acquiring of many final goods and services not through regular market transactions. E.g. vegetable grown in the backyard of the house. 5. Define nominal GNP Ans. GNP measured in terms of current market prices is called nominal GNP. 6. Define Real GNP. Ans. GNP computed at constant prices (base year price) is called real GNP. 7. Meaning of real flow. Ans. It refers to the flow of goods a
Read more