The terms ‘economic growth’ and ‘economic development’ sound similar. However, the two concepts are different. While economic growth is a quantitative concept, economic development is a qualitative concept.
What is Economic Growth?
Economic growth can be referred to as the increase that is witnessed in the monetary value of all the goods and services produced in the economy during a time period. It is a type of quantitative measure that reflects the potential increase in the number of business transactions taking place in the economy.
Economic growth can be measured in terms of the increase in the aggregate market value of additional goods and services produced by using economic concepts such as GDP and GNP.
Economic growth is a narrow concept when compared to economic development.
Also Check: Human Capital on Economic Growth
What is Economic Development?
Economic development refers to the process by which the overall health, well-being, and academic level of the general population of a nation improves. It also refers to the improved production volume due to the advancements of technology.
It is the qualitative improvement in the life of the citizens of a country and is most appropriately determined by the Human Development Index (HDI). The overall development of a country is based on many parameters such as the creation of job opportunities, technological advancements, standard of living, living conditions, per capita income, quality of life, improvement in self-esteem needs, GDP, industrial and infrastructural development, etc.
Let us look into the most significant points of difference between economic growth and economic development from the following table:
|Economic Growth||Economic Development|
|It refers to the increase in the monetary growth of a nation in a particular period.||It refers to the overall development of the quality of life in a nation, which includes economic growth.|
Span of Concept
|It is a narrower concept than that of economic development.||It is a broader concept than that of economic growth.|
|It is a uni-dimensional approach that deals with the economic growth of a nation.||It is a multi-dimensional approach that looks into the income and as well as the quality of life of a nation.|
|Short-term process||Long-term process|
|Quantitative||Both quantitative and qualitative|
|Developed economies||Developing economies|
|It is an automatic process that may or may not require intervention from the government||It requires intervention from the government as all the developmental policies are formed by the government|
Kind of changes expected
|Quantitative changes||Quantitative as well as qualitative changes|
|GDP, GNP||HDI, per capita Income, industrial development|
This article helps students gain a broader understanding of the concepts of economic growth, economic development, and the difference between them. For more such interesting concepts, stay tuned to CoolGyan’S.