Economic Growth vs Economic Development Differences
Very often these two words are mistakenly understood the same but in real economic language these Economic Growth and Development are very different in their meanings and completely contrast each other. The parameters to measures each of them are different from each other. Here we discuss the top differences between Economic Growth and Economic Development
What is Economic Growth?
It is the quantitative measure which considers the rise in the output produced in an economy/nation in a particular period in its monetary value.
The key parameters of economic growth in any economy are its Gross Domestic Product (GDP) and gross national product which helps in measuring the actual size of an economy. For example, we say GDP of India is 2.8 trillion USD (nominal value) and ranked 6thin globe whereas GDP of the United States of America is 19.3 trillion USD and ranked one.
It shows how much the production of goods and services has increased compared from last year in a quantitative manner. It has many parameters to measure and few of them are as below:
- Human Resources
- Natural Resource
- Advancement in technology
- Capital formation
- Political and social economic factors
What is Economic Development?
Economic development projects a broader picture of an economy which takes into account an increase in production level or output of an economy along with an improvement in the living standard of its citizens. It focuses more on socioeconomic factors rather than the just quantitative increase in production.
Economic development is a qualitative measure which measures improvement in technology, labour reforms, rising living standards, broader institutional changes in an economy.
HDI index (Human development) is apt tool to measure the real development in an economy and based on this no countries are ranked as it includes the overall development regarding the standard of living GDP per capita, living conditions, government facilities, employment opportunities, self-esteem of its people and many more other reforms/changes in grass root of an economy.
Economic Growth vs Economic Development Infographics
Here we provide you with the top 10 differences between Economic Growth and Economic Development
Economic Growth vs Economic Development – Key Differences
Let us point out key differences between Economic Growth and Economic Development:
- As per the economist Amartya Sen, economic growth is one aspect of economic development. Also, united nation see it like this “Economic development focuses not only on man’s materialistic need but it focuses on overall development or rise in its living standards.
- In simple terms, economic growth is one aspect of economic development.
- Economic growth can be calculated in a specific period of time whereas economic development is an ongoing/ continuous process which focuses more and more advancement in the lives of individuals.
- Economic development is more related to developing countries like India, Bangladesh, South Africa where it measures the improvement in HDI index whereas economic growth is moreover related to developed countries but its parameters can be applied to developing countries also as these parameters include GDP, GNP, FDI investment etc.
- The economic growth reflects the positive change in an economy whereas economic development reflects the real change in an economy.
- Economic growth is a quantitate factor which measures what is the total output or production of a country whereas economic development is the qualitative factor which gives emphasize on improvement in the quality of living standards of its people.
Economic Growth vs Economic Development Head to Head Differences
Let’s now look at the head to head differences between Economic Growth and Economic Development
|Comparison between Economic Growth and Economic Development||Economic Growth||Economic Development|
|Definition / Meaning||It is the positive quantitative change in the output of an economy in a particular time period||It considers the rise in the output in an economy along with the advancement of HDI index which considers a rise in living standards, advancement in technology and overall happiness index of a nation.|
|Concept||Economic growth is the “Narrower” concept||Economic development is the “Broader” concept|
|Nature of Approach||Quantitative in nature||Qualitative in nature|
|Scope||Rise in parameters like GDP, GNP, FDI,FII etc.||Rise in life expectancy rate, infant, improvement in literacy rate, infant mortality rate and poverty rate etc.|
|Term / Tenure||Short term in nature||Long-term in nature|
|Applicability||Developed nation||Developing economies|
|Measurement Techniques||Increase in national income||Increase in real national income i.e. per capita income|
|Frequency of Occurrence||In a certain period of time||Continuous process|
|Government Aid||It is an automatic process so may not require government support/aid or intervention||Highly dependent on government intervention as it includes widespread policies changes so without government intervention it is not possible|
|Wealth Distribution||Economic growth does not emphasize on the fair and equal distribution of wealth/income among all its people.||It focuses on a balanced and equitable distribution of wealth among all individual and tries to uplift the downgrade societies.|
Economic Growth vs Economic Development – Conclusion
Well from the above discussion and knowledge we can clearly say that economic development is a bigger concept and economic growth is its subset. Or in other terms, economic development itself includes economic growth as the former includes bigger parameters which themselves increase the economic growth of an economy.
This has a been a guide to the top differences between economic growth and economic development. Here we also discuss the economic growth vs economic development with examples, infographics, and comparison table. You may also have a look at the following articles –