Economic Development and Economic Growth are one of the most important concepts in Economics. Both of these concepts are being applied and their achievement has been the primary goal of most of the nations. There are 195 countries in the world of which most of the countries are in the process of economic development. Some of the countries have sustained economic development and they are in the process of economic growth.
Thus, the definition of economic development is that it is a process by which an economy is transformed from one whose rate of growth of per capita income is small and negative to one in which a significant self-sustained rate of increase of per capita income is a permanent long term feature. A society will be called underdeveloped if economic development is possible but incomplete.
Economic development is more comprehensive in nature. It implies progressive changes in the socio-economic structure of the country. Viewed in this way economic development involves a steady decline in agricultural shares in GNP and continuous increase in shares of industries, trade banking and other services. Development implies the change in the technological and institutional organization of production as well as in distributive pattern of income. The scope of development includes the process and policies by which a nation improves the economic, political and social well being of its people.
Economic Development is a static theory that documents the state of economy at a certain time. According to Schumpeter, the changes in this equilibrium state to document in economic theory can only be caused by intervening factors coming from the outside. Economic development generally involves improvements in a variety of indicators such as literary rates, life expectancy and poverty rates.
On the other hand economic growth is concerned about the increase in per capita income or increase in the GNP. In recent years, economic growth has been used to refer sustained increase in a country’s output of goods and services, or more precisely product per capita. Output is generally measured in terms of GNP.
Economists argue that growth is achieved through the steady increase in the per capita incomes, productivity only when all the productive resources in the economy are put to use. This view indicates that growth occurs only when relative income and output changes are positive over time.
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This article is in continuation with our previous articles on Economics which include Inflation, Business Cycles, Solow's Growth Model, Phillips Curve
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