Economic growth and development/Growth vs development

The basic difference between economic growth and economic development is that growth speaks quantitative numbers, while economic development is all about the qualitative changes in the structure of economy and society. Let’s see how both terms are interdependent and matter a lot for policy makers.

Meaning of economic growth and economic development

First of all let’s see what does economic growth means with simple example.

Understanding Economic growth

Increase or decrease in percentage of Gross domestic product or GDP in a year compare to previous is termed as economic growth.

Suppose, in previous year China’s gross domestic product in terms of dollars was 10 trillion. In this year, the numbers of GDP has risen to 11 trillion dollars. It means that the exact one trillion dollar increase has registered by the Chinese economy.

Simply put, the one trillion dollars increase in the GDP in one year compare to previous is termed as growth in economy or economic growth China experienced. In percentage, it is 10% and we used to say that economy is growing by double digit number.

Contrarily, in opposite scenario, if the numbers are lesser than the previous year, then the growth becomes negative. In short, economic growth does speak the numbers in terms of GDP rather than actual changed resulted in the process of economic activities.

Short summary of growth and development

First, economic growth speaks the numbers of GDP. It is compared with previous data.
Second, growth may be negative or positive depending on the economic activities.
Third, it is a unidimensional and quantitative in nature.
Fourth, it doesn’t consider whether there is change in living standards of people or not.
Fifth, economic growth might possible without economic development; but, economic development can’t be possible without economic growth.
Sixth, economic development manifests the changes in the sectoral composition, living standards, and urbanisation.
Seventh, development is a slow process, and it takes time to manifest.
Eight, in short, development is a product of economic growth on condition that it is properly apportioned.

Description of economic development

Unlike growth, development indicates the degree of structural changes took place in different sectors in the course of growing economy. Preciously, economic development takes account of the socio-economic as a byproduct of economic activities.

More often, economic growth and economic development are used interchangeably but are quite different.

Structural changes and change in structure

fI the economic growth is accompanied by the structural transformation of economy, it is called sectoral economic development. But, if the growth fails to impact the sectoral composition of the GDP, it is labelled as growth without development.

Example of economic development

Let’s take an example of Indian economy. Assume that at the present sectoral composition of Indian economy is like 20 percent primary agricultural sector, 25 percent secondary industrial sector, and 55 percent services sector.

Now, compare this data with previous year and see whether the data or numbers are showing any changes. If there is a constant decline in the share of primary sector in GDP, it is going to increase the share from secondary and services sector.

Structural transformation and economic development

For layman’s terms, if the share of secondary and services sectors are constantly rising and surplus labour force is getting jobs in these sectors, it is termed as structural transformation.

In short, the share of primary sector is overtaken by secondary industrial sector and service sector is showing further increase.

In the meantime, people shifted from primary and secondary sectors experiencing better education, health, and quality standards of living with better per Capita income.

Finally, it is observed that large scale migration occurs from rural to urban areas in search of quality jobs. In this way, the process of urbanisation begins. And, eventually, huge urban conglomerations emerge.

Economic growth with development or growth without development

Technically, both economic terms economic growth and economic development are frequently used by economists and policy makers as a yardstick to judge the progress report of given economy.

Logically, two terms are interrelated as well as interdependent. However, frequently, it is observed that growth without economic development results if the resources are not targeted with equity and justice.

Last words on growth development

Undoubtedly, growth without development will result in the regional disparity and economic inequality. Ultimately, resentment and uprising may harm the whole process unless it is recorrected timely. This is all about the difference between growth and development.

Solved questions on economic growth and economic development

For simple understanding, I have answered some important questions regarding this article growth and development. Please, take a careful look of these solved questions.

Q.1. What does economic growth mean?

Ans: If the GDP or Gross domestic product of a nation experience positive or negative changes in numbers in comparison, it is termed as economic growth. It may be positive or negative.

Q. 2. How do we define economic development?

Ans: Unlike economic growth, economic development is all about the changes in the structure of the sectors of GDP and living standards of people. If the share of the primary sector is overtaken by secondary and services, it is called economic development. Besides, changes in lifestyles of people in terms of education, health, income, also considered.

Q. 3. Is development possible without economic growth?

Ans: Absolutely not. For development, we need resources. If there is no growth, then, how could we think about to bring changes? But, economic growth can be possible without economic development if it falls to trickle down.

Q. 4. What is true development?

Ans: Development that helps to liberate the masses from the clutches of poverty and ignorance without compromising the carrying capacity of nature is called true economic development.