DIFFERENCE BETWEEN ECONOMIC GROWTH AND ECONOMIC DEVELOPMENT

Although economic growth and economic development are often used interchangeably, they do not mean the same thing.

Economic growth refers to an increase in the national income of a country,  as measured by an increase in national income per capita.

On the other hand, economic development refers to a sustained increase in national income that implies increased real per capita income, improved education and health care services, environmental protection, legal and institutional reforms and an efficient production and distribution system for goods and services.

Differences Between Economic Growth And Economic Development

1. Economic growth denotes a steady increase in national income, whereas economic development denotes both a steady increase in national income and improved socio-economic conditions.

2. Economic growth is a narrow concept since it considers only an increase in national income.

In contrast, economic development is a broad concept since it considers increases in national income as well as increases in the standard of living and socio-economic conditions of the citizens.

3. Economic growth is primarily quantitative because it measures only national income whereas economic development is both qualitative and quantitative because it measures national income, as well as improvement in the social and economic conditions of citizens.

The human development index (HDI), the human poverty index (HPI), and other qualitative indicators are used to assess economic development. Economic growth, on the other hand, is measured by an increase in GDP.

4. While citizens' quality of life may not necessarily improve as a result of economic growth, citizens' quality of life does improve as a result of economic development.

5. Economic development is always accompanied by structural and social changes, but economic growth may or may not be accompanied by these changes.

6. Economic development is more relevant to measuring progress and quality of life in developing countries.

In contrast, economic growth is more relevant in measuring the progress in developed countries.

7. Economic growth is a short-term process because changes in national income can be easily measured year to year.

Economic development, on the other hand, is a process that may take 20 to 25 years to complete.

This is because changes in the socio-economic conditions of an economy take time to manifest.

8. Economic development emphasizes balanced economic growth, whereas economic growth emphasizes upward statistical movement in national income.

9. Economic development is impossible without economic growth, but economic growth is possible without economic development.

Simply said, economic growth is necessary for economic development.

FeaturesEconomic growth Economic development
MeaningIt means an increase in real GDPit means an increase in GDP as well as improvements in the standard of living of citizens
Time horizonShort termLong term
Will the quality of life improve? Not necessarily yes
Measured usingQuantitative methodsQuantitative and qualitative methods
ScopeNarrowbroad
A problem ofdeveloped countriesdeveloping countries
Concerned withthe number of goods and services as measured using GDPthe quantity and quality of goods and services as measured by an increase in GDP and improvement in the standard of living
Focus on Raising the volume of productionRaising the standard of living
DependenceEconomic growth does not depend on economic development Economic development depends on economic growth
Dimensionsingle dimensionalMulti-dimensional

To summarize, the major difference between economic growth and economic development is that the latter is merely an increase in national income whereas the former is an increase in national income and socio-economic conditions of an economy.

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