Economic Growth versus Economic Development
Economic growth is defined as an increase in an economy’s production of goods and services over time. Changes in Gross Domestic Product (GDP), Gross National Product (GNP), or other indicators of economic output such as industrial production, employment rate, or investments are commonly used to measure this increase. Technological advancements, increased capital investment and increased productivity drive economic growth.
It is critical to increasing national income, promoting economic stability, and creating jobs. However, economic growth may not always improve citizens’ overall quality of life because it does not address issues such as poverty, inequality, and social injustices.
On the other hand, economic development refers to advancements in a society’s economic, social, and political aspects that aim to improve citizens’ well-being. It is a broader concept that encompasses economic growth and social and political changes that improve people’s well-being. Changes in the Human Development Index (HDI), life expectancy, literacy rate, poverty rate, and access to basic amenities such as healthcare, education, and housing are all indicators of economic development. Education, healthcare, human rights, political stability, and social justice are all driving factors.
Economic development is critical for promoting inclusive and sustainable growth, reducing poverty and inequality, and improving citizens’ overall quality of life.
The following table outlines the key difference between economic growth and economic development:
|Basis||Economic Growth||Economic Development|
|1. Meaning||Increase in the production of goods and services in a country over time.||Progress in the economic, social, and political aspects of a society aimed at improving the welfare of citizens.|
|2. Measurement||Measured by changes in GDP, GNP, or other indicators of economic output such as industrial production, employment rate, or investments.||Measured by changes in the human development index (HDI), life expectancy, literacy rate, poverty rate, and access to basic amenities such as healthcare, education, and housing.|
|3. Focus||A narrow focus on the quantitative aspect of the economy.||Broader focus on the qualitative and quantitative aspects of the economy.|
|4. Scope||Economic growth refers only to the increase in the production of goods and services in a country over time.||Economic development includes social and political changes and focuses on the improvement of the overall well-being of people.|
|5. Factors||Driven by factors such as technological advancements, increase in capital investment, and rise in productivity.||Driven by factors such as education, healthcare, human rights, political stability, and social justice.|
|6. Outcome||Increases income and wealth but may not lead to an improvement in the quality of life of citizens.||Improves the quality of life of citizens, with a focus on reducing poverty, inequality, and social injustices.|
|7. Timeframe||Short-term view, typically measured over a few years.||Long-term view, typically measured over several decades.|
|8. Policy Implications||Focus on policies that promote economic growth, such as tax incentives, deregulation, and increased investment.||Focus on policies that promote economic development, such as education and healthcare policies, social welfare programs, and policies that promote political stability and social justice.|
|9. Importance||It is important for increasing national income and promoting economic stability, but it may not necessarily improve citizens’ overall quality of life.||Essential for promoting sustainable and inclusive growth, reducing poverty and inequality, and improving the overall well-being of citizens.|
|10. Examples||Examples of countries that have experienced economic growth include China, India, and Brazil.||Examples of countries that have experienced economic development include Norway, Denmark, and Sweden.|