There are different economic schools of thought that gives different thoughts to understand Economics. Under this, Article we will discuss the difference between economic growth and economic development.
For the study of the difference between economic growth and economic development we first look at the basic economic concepts. That belongs to the difference between economic growth and economic development
On The Other Hand
There is no generally accepted definition of “developing countries,“.
The expression refers to relatively poor countries or countries where standards of living are relatively low on average.
Kofi Annan, the former Secretary-General of the United Nations, defined a developed country as follows. “A developed country is one that allows all its citizens to enjoy a free and healthy life in a safe environment”
The World Bank Classifies Countries into Four Income Groups
- Low-income countries GNIpc $4,036 and $12,476 or less.
- Lower middle-income countries GNIpc between $1,026 and $4,036.
- Upper middle-income countries GNIpc between $4,036 and $12,476.
- High-income countries GNIpc above US$12,476.
A positive change in the level of production of goods and services by a country over a certain period of time
The increase over a period of time in the production of goods and services and the capacity to produce goods and services is called economic growth
Economic growth may well involve not only more output derived from greater amounts of inputs but also greater efficiency.
- Sen as “economic development is the process of expanding the real freedoms that people enjoy“
- Mahbub ul Haq “the objective of development, is to create an enabling environment for people to enjoy long, healthy and creative lives“
In short, there is more to economic development than growth in incomes
Economic Development is a process whereby the national income of a country increases over a long period of time when income growth rate must be greater than population growth rate.
Economic development is a dynamic process extent over a long period of time. Which enables an underdeveloped economy to break a vicious circle of poverty. That use to attains a higher level of income, output, and employment, secure better level of living through the introduction of economic and non-economic changes.
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Difference Between Economic Growth and Economic Development
Following are the difference between economic growth and economic development in points. You can study all the difference between economic growth and economic development with detail
- “According to Hicks” economic development deals with the problems of underdeveloped countries like Pakistan whereas Economic growth deals with the problems of developed countries.
The objective of economic development is to increase output level while the objective of economic growth is to maintain the level of output which they have already achieved.
- According to Myrdal, growth is related to quantitative changes i.e. increase in Labor force, consumption, trade, and capital, While
Development is concerned with qualitative changes. Fr example development in economic wants, goods, incentives, institutions, productivity or the upward moment of the entire social system.
Economic development is wider because
Economic development = Economic growth + structural changes
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Approach is different
Economic development deals with education and health facilities, infrastructure, refined institutions.It also deals law and order conditions, political stability, technological progress.
On the other hand, economic growth deals with increase in overall output of a country
Difference in Scope
The scope of economics development is far broader than the economic growth. Because an increase is economic growth rate is just one reason that increases economic development in a country.
But there are many other variables which are responsible for the economic development of a country.
ED = Eco growth + Structural changes
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Vary from Country to Country
Economic Development is not a problem of developed countries because they have already achieved economic development. DCs have their focus on increasing their growth rate. On the other hand economic development is a problem of underdeveloped countries (UDCs). They want to enhance their level of infrastructure, technology, human capital
Time Span of both approaches
Economic growth can be achieved in a very small period of just one year. But the economic development requires a large time
Economic development cannot achieve without political stability. For the development of a country, there must have stable political conditions. On the other hand, economic growth may compatible with political instability
Importance of each concept
The concept of Economic Development has greater importance than economic growth. Because growth does not ensure the increase in the welfare of people of the country.
Economic growth could result from an increase in the welfare of selected people. On the other hand, after achieving economic development, fruits will be for all people of the economy. And so The welfare of all people will increase
The economic growth does not ensure a better and positive social impact on the economy. Because it is possible that economic growth is the result of an increase in output of only a few industries in the country.
On the other hand economic development ensures a positive social impact on the economy. Because after achieving economic development the financial and social life of people enhances
Structural and Institutional Changes
Economic growth does not require structural and institutional changes. Economic growth incompatible with a traditional mechanism of institutions and structure of the economy. This is because institutions must adopt modern techniques and technology for economic development
Dependence of others
After economic growth, the country still depends on other developed countries. As growth rate of Pakistan is positive but we are still dependent on other countries. On the other hand, after economic development, the country develops self-sufficiency and becomes independent
Quantitative and qualitative variables
Economic growth is associated with an increase in Labor force, consumption, trade, and capital. While economic development is concerned with qualitative changes. Such as in economic wants, goods, incentives, institutions, productivity or the upward moment of entire social system
There are different measures of economic development that is use all over the world. For example Physical Quality of Life Index, Human Development Index etc. On the other hand, we just compare output of current year and with output of previous year to get economic growth rate
Scope or Need for Economic Development
According to Thrilwall
After the great depression and in the aftermath of WWII, there was renewed academic interest among professional economist in the growth and development process
- Poor countries themselves aware of their own backwardness
- Absolute number of poor people are considerably greater now than before
- Interdependence between countries in the world
Concept of Economic Development
If we want to know the exact meaning and different channels of economic development and realize the fruits which come with it. If we want to know how economic development can affect our standard of living, then we have to study the subject of economic development
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