Top 9 Differences Between Economic Growth and Economic Development
The terms ‘economic growth’ and ‘economic development’ may appear identical. Nevertheless, the two conceptions are distinct. Economic growth is a measure of the increase in the size or quantity of an economy, whereas economic development refers to the improvement in the quality and standard of living within an economy.
Economic growth refers to the increase in the production and consumption of goods and services inside an economy over a specific period of time. It is typically measured by the growth rate of the Gross Domestic Product (GDP), which is the total value of all goods and services produced within a
Economic growth is the term used to describe the rise in the monetary value of all goods and services generated in the economy during a specific period of time. It is a quantitative metric that indicates the potential growth in the number of business transactions occurring in the economy.
It can be quantified by assessing the rise in the overall market worth of extra goods and services generated through the application of economic principles like GDP and GNP.
Economic growth is a limited term in comparison to economic development.
Additionally, please review: The Impact of Human Capital on Economic Growth.
Economic development refers to the process of improving the economic well-being and quality of life in a particular region or country. It involves many strategies and policies aimed at promoting economic growth, reducing poverty, and increasing productivity and employment opportunities.
Economic development pertains to the systematic advancement of the overall welfare, prosperity, and educational attainment of the entire populace of a country. It also denotes the increased production capacity resulting from technological improvements.
The enhancement in the quality of life for the inhabitants of a nation is best assessed by the Human Development Index (HDI). The holistic progress of a nation hinges upon various factors including the generation of employment possibilities, technical advancements, living standards, conditions of living, per capita income, quality of life, enhancement of self-esteem demands, GDP, industrial and infrastructural growth, and so on.
Now, let’s examine the key distinctions between economic growth and economic development as presented in the table below:
Top 9 Differences Between Economic Growth and Economic Development
| Aspect | Economic Growth | Economic Development |
|---|---|---|
| Definition | Increase in the production and consumption of goods and services, measured by GDP growth. | Process of improving economic well-being and quality of life, involving strategies for growth, poverty reduction, and more. |
| Scope of Concept | Limited to the increase in economic output and monetary value. | Broader, including improvements in living standards, education, and overall welfare. |
| Extent or Range | Focuses solely on economic progress without considering other dimensions. | Multidimensional, encompassing income, quality of life, and broader societal improvements. |
| Duration | Transient process aimed at short-term increases in economic activity. | Prolonged process involving sustained improvements over time. |
| Quantification | Primarily quantitative, measured through GDP and GNP. | Both quantitative and qualitative, including metrics like the Human Development Index (HDI). |
| Application | Common in advanced economies looking to increase market value. | Relevant for both emerging and developed economies aiming for comprehensive development. |
| Government Assistance | May or may not require government intervention. | Requires significant government intervention for policy formulation and implementation. |
| Anticipated Modifications | Numerical changes in economic indicators. | Both numerical and qualitative changes in living standards and welfare. |
| Examples | GDP and GNP as indicators of economic output. | HDI reflecting overall development based on life expectancy, education, and income. |
The article highlights the distinctions between National Income and Private Income, providing a clear understanding of how each measure contributes to evaluating economic performance. For more insights and engaging content, continue to follow Eduacademy.