Posted by : Ahsan Khan Thursday, 22 December 2011


In general, the terms “Economic Growth” and “Economic Development” are used to express the same idea i. e., “Economic Advancement”. But the term economic development is more comprehensive in its scope. Growth means persistent increase in per capita income. While development includes growth and structural changes like, infrastructural, social and political in the country.
ECONOMIC GROWTH:
Definitions:
Ø      According to Micheal P. Todaro.
“Economic growth is a steady process by which the productive capacity of the economy is increased over time to bring about rising levels of national output and income”.
Ø      According to Simon Kuznets.
“Economic growth may be defined as a long term process wherein the substantial and sustained rise in real national income, total population and real per capita income takes place”.  
  
Essentials of Economic Growth:
Above definitions are showing following basics of economic growth:
  1. Economic growth is a long run process; it includes a period of decades.
  2. Economic growth shows higher rate of increase in real per capita income than rate of growth of population.
  3. Economic growth is always linked with large increase in productive ability of the economy.
  4. Economic growth is connected with the fair distribution of income and wealth.
  5. Economic growth is attached with the reduction in poverty and unemployment.
ECONOMIC DEVELOPMENT:
Definitions:
Ø      Simple Definition.
“It refers to the process whereby the total supply of goods and services of the society increases leading towards improved living standard.”
Ø      According to Micheal P. Todaro.
“Development must be conceived (considered) for as a multi-dimensional process involving major change in social structures, popular attitudes and national institutions as well as the acceleration of eco-growth, the eradication (end) of poverty and reduction of inequality of wealth.” 

Structural Changes of Economic Development:
Economic development represents following structural changes in various sectors of the country:
 There is a change in the occupational structure. In economic development there is decrease in the share of labour force in primary sector (farming, fishing and mining etc.) and increase in the share of labour force in secondary sector (industry etc).
  1. There is a change in the structure of national output. The contribution of primary sector in the national output falls and the share of secondary and tertiary (3rd) sector slowly go up.
  2. There is a change in the structure of industrial production. There is an increase in the production of capital goods and decrease in the production of consumer goods.
  3. There is a change in the structure of foreign trade. The share of primary goods in exports decreases and the share of capital goods in imports increase. Accordingly, in economic development there is an increase in exports of manufactured and final goods. Similarly, there is decrease in the imports of consumer items.
  4. There is a change in the structure of technology. In the economic development modern and advanced techniques are used in all the sectors of economy.
  5. There is a change in the social and institutional sector. Due to economic development there is an increase in the self-esteem and living standard of the population.
 Ø      Conclusion:
We conclude that, normally the terms economic growth and economic development are used for the explanation of encouraging changes in the economic achievements of a country.

Economic Growth                 = Annual increase in per capita income

Economic Development      = Economic Growth + Structural Changes

DIFFERENCES BETWEEN ECONOMIC GROWTH AND ECONOMIC DEVELOPMENT:
Both the terms seem similar, but there are various following points, which create difference between these two:

1- Definition

Economic Growth
Economic Development
The term economic growth is only concerned with raising income level and volume of production of goods and services.
The basic feature of economic development is to raise income level and improve the human being.


2- Nature in Economic Literature

Economic Growth
Economic Development
Economic growth is the key issue under traditional economics. According to this approach “take care of growth and poverty would eliminate automatically.”
Economic development is the main issue under modern economics literature. Accordingly, “take care of poverty and growth would take care of itself.”

3- Scope

Economic Growth

Economic Development
Scope of economic growth is narrow because it is concerned with changes in income level only.
Scope of economic development is wide and comprehensive than economic growth. Its link is not only with income but also with the prosperity of the society and economy.

4- Institutional changes

Economic Growth
Economic Development
In case of economic growth strong and effective institutional set-up is not necessary.
Efficient institutional set-up is necessary. Effective and strong institutional revolution is the sign of economic development.

5- Type of Approach

Economic Growth
Economic Development
According to various economists, economic growth is said to be quantitative approach.
Economic development refers to the qualitative approach.

6- Importance

Economic Growth
Economic Development
Economic growth is less important due to the attachment with income level only.
The Concept of economic development is more important because it discusses an economy in wider sense.

7- Time Span

Economic Growth
Economic Development
Economic growth is a short-term process. We can measure income changes yearly. So, its time span may be of one year.
Economic development is a long-term process about 20 to 25 years. Because it takes years to change social, economic and institutional set-up.

8- National Problem

Economic Growth
Economic Development
Economic growth is the problem of developed countries of the world.
Economic development is the problem of developing countries.

 9- Political Changes

Economic Growth
Economic Development
Economic growth is not concerned with the political stability.
The concept of economic development is incomplete without political stability.

10- Dependence and Self-Sufficiency

Economic Growth
Economic Development
Economic growth does not ensure the freedom from the dependence of foreign countries.
In case of economic development our dependence on other countries reduces and country adopts the self-reliance policy.

11- Economic Application

Economic Growth
Economic Development
Economic growth first checks the statistical upward movement in the economy.
Economic development basically emphasizes on the balanced growth of economy.

12- Social Impact

Economic Growth
Economic Development
There may or may not be any social changes in case of economic growth. It ignores the human beings and it is only concerned with income level etc.
Social changes, in case of economic development, are compulsory. It refers to the better jobs, availability of food, better health and education etc.

13- Economic Welfare

Economic Growth
Economic Development
Economic growth is not much attached with the human beings. It has no link with the good or bad.
In economic development, more importance is given to the mankind as compare to the economic growth.

14- Practical Significance

Economic Growth
Economic Development
In Pakistan, in 1960s, growth rate was higher than the growth rate in 1990s.
Now, Pakistan is more developed country as compare to 1960s and 1990s. Today in Pakistan there is more industries, universities and other infrastructure etc.

15- Measurement

A.      Economic Growth

Economic Development
Economic growth is measured only by comparing income levels of different years. It also can be measured numerically.
Measurement of economic development is based on the reduction in poverty, development of human being and living standard etc.

 16- Quantity and Quality

Economic Growth
Economic Development
Economic growth is concerned with quantity of goods and services only.
Economic development is concerned with not only quantity but also with the quality.

17- Problem of Assessment

Economic Growth

B.     Economic Development

It is very difficult to estimate exactly the level of economic growth in developing countries like Pakistan.
Computation of economic development is not a difficult task in developed nations of the world.

18- Use of Technology

Economic Growth
Economic Development
In economic growth, use of advanced technology is not appreciated.
For the economic development use of modern technology is compulsory.

Conclusion:
From all above points of difference, we conclude that economic growth is attached to the increase in production and income etc. while in economic development more importance is given to man and it tries to remove poverty.

{ 8 comments... read them below or Comment }

  1. and you have done an amazing job. So useful material. Thanks !

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  2. This comment has been removed by the author.

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  3. I was looking for this sort of piece. Very well written, thanks :)

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  4. This is outstanding difference in google i thnik no body can write better than you

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  5. Thnx a lot ... it was vry easy to write my xmm.... god bless u.

    ReplyDelete
  6. sir i need reference for the definitions provided. can i have them as early as possible . thanks in advance

    ReplyDelete

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