Economic growth and economic development

1. 1. Economic Development & Economic Growth

2. 2. Economic Growth is a narrower concept than economic development. It is an increase in
a country's real level of national output which can be caused by an increase in the quality of
resources (by education etc.), increase in the quantity of resources & improvements in
technology or in another way an increase in the value of goods and services produced by
every sector of the economy. Economic Growth can be measured by an increase in a
country's GDP(gross domestic product).
3. 3. Economic development is a normative concept i.e. it applies in the context of people's
sense of morality (right and wrong, good and bad). The definition of economic development
given by Michael Todaro is an increase in living standards, improvement in self- esteem
needs and freedom from oppression as well as a greater choice.
4. 4. The Human Development Index (commonly abbreviated HDI) is a summary of human
development around the world and implies whether a country is developed, still developing,
or underdeveloped based on factors such as life expectancy, education, literacy, gross
domestic product per capita. The results of the HDI are published in the Human
Development Report, which is commissioned by the United Nations Development
Program(UNDP) and is written by scholars, those who study world development and
members of the Human Development Report Office of the UNDP.
5. 5. According to the UNDP, human development is about creating an environment in which
people can develop their full potential and lead productive, creative lives in accord with their
needs and interests. People are the real wealth of nations. Development is thus about
expanding the choices people have to lead lives that they value.
6. 6. (c) Decent Standard of Living. (b) Knowledge (a) Longevity It is the cumulative
measurement of: In the year 1990 the United Nations Development Programme in its first
Human Development Report introduced the concept of Human Development Index.
7. 7. The rank of a country is determined by the overall developments in these three basic
dimensions of human developments. ADI ranks countries, in relation to each other to tell
them how for a country has travelled and how for yet it has to travel in the part of Human
Development (c) Decent standard of life: It is a joy to enjoy a quality and standard life. It
depends upon the purchasing power of the people and the per capita income of the people
etc. (b) Knowledge: It is a choice to acquire literacy, education, information, etc. It is
measured by the literate percentage in ratio with the total population. The literacy rate may
be compared in the primary, secondary and tertiary levels. (a) Longevity: It shows the life
expectancy. It is a choice to live long and healthy life.
8. 8. The most accurate method of measuring development is the Human Development Index
which takes into account the literacy rates & life expectancy which affect productivity and
could lead to Economic Growth. It also leads to the creation of more opportunities in the
sectors of education, healthcare, employment and the conservation of the environment. It
implies an increase in the per capita income of every citizen.

9. 9. Economic Growth does not take into account the size of the informal economy. The
informal economy is also known as the black economy which is unrecorded economic
activity. Development alleviates people from low standards of living into proper employment
with suitable shelter. Economic Growth does not take into account the depletion of natural
resources which might lead to pollution, congestionDifference between economic growth
and economic development. & disease.
10. 10. Development however is concerned with sustainability which means meeting the needs
of the present without compromising future needs. These environmental effects are
becoming more of a problem for Governments now that the pressure has increased on them
due to Global warming.
11. 11. Basis Economic Development Economic Growth Economic development implies
changes in income, savings and investment along with progressive changes in socioeconomic structure of country (institutional and technological changes). Economic growth
refers to an increase in the real output of goods and services in the country. Factors:
Development relates to growth of human capital indexes, a decrease in inequality figures,
and structural changes that improve the general population's quality of life. Growth relates to
a gradual increase in one of the components of Gross Domestic Product: consumption,
government spending, investment, net exports.
12. 12. Basis Economic Development Economic Growth Measurement: Qualitative.HDI (Human
Development Index), gender- related index (GDI), Human poverty index (HPI), infant
mortality, literacy rate etc. Quantitative. Increase in real GDP. Shown by PPF. Concept:
Normative concept Narrower concept than economic development
13. 13. Basis Economic Development Economic Growth Effect: Brings qualitative and
quantitative changes in the economy Brings quantitative changes in the economy Relevance:
Economic development is more relevant to measure progress and quality of life in developing
nations. Economic growth is a more relevant metric for progress in developed countries. But
it's widely used in all countries because growth is a necessary condition for development.