In this topic/article we will take up Economic Growth and Economic Development. We will see the definition, parameters, measurement tools & difference between Economic Growth and Development.
Economic growth is a quantitative progress which represents increase of economic variable like national income over a period of time. The other economic variables can be food production, per capita income, road connectivity etc. Growth rate is an annual concept which is calculated with some reference period.
For example, Suppose Nestle produces 100 chocolates in 2017 and 120 chocolates in 2018. Here growth rate of Nestle for year 2018 is 20%. The growth rate can be positive or negative.
Economic development is a qualitative as well as quantitative improvement of life in an economy. The improvement in quality of life can be measured in form of improvement in education, health, nutrition etc. The better education, health, nutrition leads to higher productivity of labour which ultimately leads to higher economic growth. Thus Economic development is a broad concept to increase national income over long period of time.
The higher economic development brings higher economic growth but higher economic growth does not guarantee higher economic development.
Economic Development = Economic Growth + Standard of living
For example, suppose there are two families say A and B having monthly income Rs 1000 each. Both families have one child.
- Family A saves Rs 500 for their future needs and Rs 500 on family expenditure.
- Whereas Family B spends Rs 500 on education of its child and Rs 500 on family expenditure.
In this case family B has spend on development which will led to the growth of family income in future once child start earning after completing his education.
Difference between Economic Growth and Economic Development
|It is a quantitative concept
||It is a qualitative concept
|It measures increase in income, GDP
||It measures improvement in quality of life parameter like education, health, food, sanitation, water etc.
|Tools like GDP, GNP measure economic growth
||Tools like Human Development Index measures economic development
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