Economic Growth and Economic Development

Economic development refers to the problems of underdeveloped countries and economic growth to those of developed countries.

Maddison Says,

“The raising of income levels is generally called economic growth in rich countries and in poor ones it is called economic development.

Kindleberger Says,

Which means “greater productivity, while economic growth means more productivity and changes in the technical and institutional arrangements by which it is developed and distributed.”

Friedman defines,

“growth as an expansion of the system in one or more dimensions without a change in its structure, and development as a transformation of social systems”.

Thus economic growth is related to a quantitative sustained increase in the country’s per capita output or income accompanied by expression in its labor force, consumption, capital, and volume of trade.

On the other hand economic development is a wider term. It is related to qualitative changes in economic wants, goods, incentives, and institutions.

It describes the underlying determinants of growth such as technological and structured changes. Development embraces both growth and decline.

An economy can grow but it may not develop because, poverty, unemployment, and inequalities may continue to persist due to the absence of technological and structural changes.

But it is difficult to imagine development without economic growth in the absence of an increase in output per capita particularly when the population is growing rapidly.

In the next topic, we briefly discuss the measurement of Economic Development which measured in four ways the 1-GNP, 2-GNP per Capita, 3-Welfare and Social Indicators.

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