Explain the major conceptual differences between the ideas of ‘economic growth and ‘economic development. In light of this, do you support the view that ‘growth of an economy is a necessary but not sufficient ‘condition for development’?
Answer:
| Economic Growth |
| Economic Growth is the positive change in the indicators of the economy. |
| Economic Growth refers to the increment in the number of goods and services produced by an economy. |
| Economic growth means an increase in real national income / national output. |
| It refers to an increase over time in a country’s real output of goods and services (GNP) or real output per capita income. |
| Economic growth focuses on the production of goods and services. |
| Economic growth relates to a gradual increase in one of the components of GDP; consumption, government spending, investment, or net exports. |
| Economic Development |
| Economic development is the quantitative and qualitative change in an economy. |
| Economic development refers to the reduction and elimination of poverty, unemployment, and inequality with the context of a growing economy. |
| Economic development means an improvement in the quality of life and living standards, e.g. measures of literacy, life expectancy, and health care. |
| Economic development includes processes and policies by which a country improves the social, economic, and political well-being of its people. |
| Economic development focuses on the distribution of resources. |
| Economic development relates to the growth of human capital indexes and a decrease in inequality. |
Economic Growth is a narrower concept that relates to an increase in a country’s real level of national output which can be caused by an increase in the quality of resources such as, education level, increase in the number of resources & improvements in technology or in another way an increase in the value of goods and services produced by every sector of the economy. On the other hand Economic development is a broader concept i.e. it applies in the context of people’s sense of morality.
It relates to an increase in living standards, improvement in self-esteem needs, and freedom from oppression as well as a greater choice. The most accurate method of measuring development is the Human Development Index which takes into account the literacy rates & life expectancy which affect productivity and could lead to Economic Growth.
Economic growth is essential for a country, but it cannot alone serve for economic development. It requires political/people and administrative will to bring structural, institutional, and technical changes to achieve sustainable growth to bring economic development.
Further economic growth can be easily measured from a country’s GDP, but GDP does not define economic development because it does not provide individual living conditions details or purchasing power capacity of an individual.