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.

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