What Is The Difference Between Economic Development And Economic Growth – Economics is a complex domain with a significant influence on our global landscape. It is crucial to determine the prosperity, welfare and prospects within societies and individuals. Two terms frequently used in economics are “economic growth” and “economic development.” Although they may appear synonymous, they refer to different concepts, each of which carries different meanings for a country

Economics is a complex domain with a significant influence on our global landscape. It is crucial to determine the prosperity, welfare and prospects within societies and individuals. Two terms frequently used in economics are “economic growth” and “economic development.” Although they may appear synonymous, they refer to different ideas, each of which carries different meanings for a country’s progress. This article will delve into the distinction between economic growth and development, their definitions, metrics, influencing factors and real-world cases.

What Is The Difference Between Economic Development And Economic Growth

What Is The Difference Between Economic Development And Economic Growth

Economic growth refers to the continuous expansion of the output of commodities and services within an economy during a specified period of time. It forms a fundamental idea in economics and is of great importance in influencing the welfare of communities.

Difference Between Economic Growth And Development

GNP is a measure that takes into account the income earned by the residents of a country, whether from within the country or abroad. It provides a perspective on a nation’s activities by considering income flows that originate outside the country but are received by its residents.

Per Capita Income, on the other hand, calculates a nation’s income by dividing its total income by its population. A higher income per capita indicates an improvement in the quality of life.

Economic development is a complex procedure involving the conversion of a nation or territory from a low-income economic state to a thriving modern industrial economy. It goes beyond mere economic expansion and includes improvements in both quality and quantity.

Let’s look at the main points of difference between economic growth and economic development from the following table:

A Meaningful Conclusion For A Difference Between Economic Growth And Development

It refers to the overall development of the quality of life in a nation, which includes economic growth.

It is a multi-dimensional approach that looks at the income as well as the quality of life of a nation.

FDI can stimulate economic growth by injecting capital, technology and know-how. However, its impact on development depends on whether it leads to sustainable job creation and technology transfer.

What Is The Difference Between Economic Development And Economic Growth

While economic growth can reduce poverty, development requires targeted efforts to bridge income gaps. Policies that promote fair distribution of resources are essential.

Eco Dev Chapter 2 Overview Of Economic Development

Education is a cornerstone of development. It promotes human capital, fosters innovation and empowers individuals to contribute effectively to society.

Infrastructure (roads, bridges, utilities) facilitates economic activity, supports growth by connecting regions, and improves overall living conditions for development. Economic growth is the increase in goods and services produced by an economy or nation, considered for a specific period of time. The rise in the country’s output of goods and services is steady and constant. This can be caused by an improvement in the quality of education, improvements in technology, or in any way if there is value addition in goods and services produced by each sector of the economy.

It can be measured as a percentage increase in real gross domestic product where a gross domestic product (GDP) is adjusted by inflation. GDP is the market value of final goods and services produced in an economy or nation.

Economic Development focuses on both qualitative and quantitative growth of the economy. It measures all aspects, which include that people in a country are richer, healthier, better educated and have greater access to good quality housing. Economic Development can create more opportunities in the sectors of education, health care, employment and the preservation of the environment. This indicates an increase in the per capita income of each citizen. Living standards include safe drinking water, improved sanitation systems, medical facilities, the spread of primary education to improve literacy rates, poverty eradication, balanced transport networks, increased employment opportunities, etc. Quality of living standards is the most important indicator of economic development. Therefore, an increase in economic development is necessary for an economy to achieve the status of a developed nation.

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This can be measured by the Human Development Index, which takes into account literacy rates and life expectancy, which affect productivity and can lead to economic growth.

Both economic growth vs economic development are popular choices in the market; let’s discuss some of the key differences:

Economic Development is considered a multidimensional phenomenon because it focuses on the income of the people and the improvement of the living standards of the country’s people.

What Is The Difference Between Economic Development And Economic Growth

This has a quantitative impact on the economy. Increase in the indicators such as income per capita and GDP, etc.

Regional Economic Development Differences Loop Vector Image

However, after examining the above information, we can say that economic growth is a subset of economic development. Economic Development is a bigger concept than economic growth. Economic Development uses various indicators to measure the progress of an economy as a whole. However, economic growth only uses specific indicators such as the gross domestic product, individual income, etc. for the calculation. Economic Growth is often contrasted with Economic Development, which can be defined as the increase in the economic prosperity of an economy or nation for the welfare of its inhabitants. Here you should know that economic growth is essential, but not the only condition for economic development.

This has led to the biggest difference between economic growth and economic development. Here we discuss the key differences between economic growth and development with infographics and comparison tables. You can also check out the following articles to learn more.

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This website or its third-party tools use cookies, which are necessary for its functioning and which are necessary to achieve the purposes illustrated in the cookie policy. By closing this banner, browsing this page, clicking on a link or otherwise continuing to browse, you agree to our Privacy Policy The term economic development is fundamentally different from the concept of economic growth. In a common sense, the term economic growth relates to the rate of change in GDP or per capita income of the people of the country. Growth deals with the quantitative aspect of change and growth. Thus, economic growth is a sustained annual increase in an economy’s real national income over a long period of time. This is an increasing trend of net national products at a constant price.

What Is The Difference Between Economic Development And Economic Growth

This definition of economic growth is not an exhaustive one. This is because the total national income may increase and at the same time the standard of living of people may decrease. This can happen when the rate of population increase is higher than the increase in national output. Per capita income increases when the economic growth rate is higher than the population growth rate.

Value Of Economic Development Sdg

Thus, economic growth can be further defined as an annual increase in the real per capita income of a country over a long period of time. The main objective of economic growth is to increase the standard of living of the people, therefore the economic growth should be defined in terms of real per capita income or production rather than only increase in national production and such increase in real per capita should be sustained increase be .

According to Michael P. Todaro and Stephen C. Smith, economic growth is defined as “the steady process by which the productive capacity of the economy produces increased overtime increases in national output and income.”

Therefore, economic growth is a continuous or persistent increase in total real GDP per capita achieved by increasing productivity, employment and the standard of living of people. The economic growth rate measured both in terms of an increase in overall Gross National Product (GNP) or Net National Product (NNP) and an increase in per capita income.

GNP measures the total output of goods and services that an economy is able to produce and per capita income measures how much real goods and services an average person will have of the commodity for consumption and investment, this is the average standard of living of the citizens of the country.

What Is The Difference Between Economic Growth And Economic Development?

Therefore, international organizations such as the World Bank and IMF both used measures of economic growth in their annual World Development Reports to compare growth with levels of living standards of the developed and the developing countries. In Nepal, the Ministry of Finance and Nepal Rastra Bank measured the economic growth of Nepal based on both overall GDP or NNP and per capita income.

Simon Kuznets (1971 Nobel Prize Winner in Economics) studied the economic growth trend of most developed countries of the world, identified six important characteristics of modern economic growth which are;

In any economy, economic growth therefore occurs when the economy achieves an increase

What Is The Difference Between Economic Development And Economic Growth

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