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Economic Development Vs Economic Growth

Economic development aims to improve living standards and increase opportunities through structural economic changes, while economic growth focuses on increasing output. Development is concerned with sustainability, alleviating poverty, and improving health and education. It is measured using indexes like HDI that account for non-income factors. Growth does not consider issues like resource depletion and inequality that development seeks to address. Development improves people's well-being holistically, while growth alone does not guarantee wider social progress.

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211 views2 pages

Economic Development Vs Economic Growth

Economic development aims to improve living standards and increase opportunities through structural economic changes, while economic growth focuses on increasing output. Development is concerned with sustainability, alleviating poverty, and improving health and education. It is measured using indexes like HDI that account for non-income factors. Growth does not consider issues like resource depletion and inequality that development seeks to address. Development improves people's well-being holistically, while growth alone does not guarantee wider social progress.

Uploaded by

Leslee Ruth Canonoy
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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CHAPTER XI ECONOMIC DEVELOPMENT VS ECONOMIC GROWTH

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, congestion &
disease. Development however is concerned with sustainability which means meeting the needs of the
present without compromising future needs.

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. The most accurate method of measuring development is the Human Development
Index which takes into account the literacy rates & life expectancy which affects 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.

INDICATORS ECONOMIC DEVELOPMENT ECONOMIC GROWTH


SCOPE Concerned with structural changes in the Growth is concerned with increase
economy in the economy's output
GROWTH Development relates to growth of human Growth relates to a gradual
capital indexes, a decrease in inequality increase in one of the components
figures, and structural changes that improve of Gross Domestic Product:
the general population's quality of life. consumption, government
spending, investment, net exports.
IMPLICATIONS Economic development implies an upward Economic growth refers to an
movement of the entire social system in increase over time in a country`s
terms of income, savings and investment real output of goods and services
along with progressive changes in (GNP) or real output per capita
socioeconomic structure of country income.
(institutional and technological changes).
MEASUREMENT Qualitative. HDI (Human Development Index), Quantitative. Increases in real GDP.
gender- related index (GDI), Human poverty
index (HPI), infant mortality, literacy rate etc.
EFFECT Brings qualitative and quantitative changes in Brings quantitative changes in the
the economy economy
CONCEPT Normative concept Narrower concept that economic
development
RELEVANCE Economic development is more relevant to Economic growth is a more
measure progress and quality of life in relevant metric for progress in
developing nations. developed countries. But it's widely
used in all countries because
growth is a necessary condition for
development.
Growth and development

The study of economic growth and development is not a single branch of economics but falls, in fact,
into two quite different fields. The two fields—growth and development—employ different methods of
analysis and address two distinct types of inquiry.

Development economics is easy to characterize as one of the three major subfields of economics, along
with microeconomics and macroeconomics. More specifically, development economics resembles
economic history in that it seeks to explain the changes that occur in economic systems over time.

THEORIES OF ECONOMIC DEVELOPMENT

Classical

Social Theories of Development

Structural Theories

Neo-classical Theories

Laissez-faire

Theory on Population

Theory on Comparative Advantage

Karl Marx Theory

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