The difference between economic growth and economic development is important to understand as both advise government and policy makers on policies and what they can do to improve their and country’s performance. The main difference between economic growth and economic development is that economic growth mean change in the amount of goods and services produced over a given period while economic development means the development is the health, political, social or other specific area for the welfare of general public.
What is Economic Growth?
Economic growth means raise in the value of goods and services produced in a country over time normally in a year after adjusting the inflation. It actually measures the increase in real gross domestic product (GDP). The most important formula to measure the growth is GDP per capita that is also known as per capita income. It is usually measure by GDP (gross domestic product), GNP (gross national product), and NNP (net national product) with the help of production, or income, or expenditure over time normally a period of one year. In economic, economic growth means, capability or potential of government to achieve production at full level of employment. Two countries performance is always measured on the basis of economic growth comparison of both countries.
What is Economic Development?
Economic development means the action taken by the policy makers to raise the standard of living of general public by developing human capital, critical infrastructure, health, security, literacy/education, regional competitiveness, social institution, and any other initiatives for the welfare of public as a whole. Economic development is a continuous process for the improvement in economic, political, and social well-being of the people. According to University of Iowa Center for International Finance and Development, “Economic development’ is a term that economists, politicians, and others have used frequently in the 20th century. The concept, however, has been in existence in the West for centuries. Modernization, Westernization, and especially Industrialization are other terms people have used while discussing economic development. Economic development has a direct relationship with the environment.”
Key Differences between Economic Growth and Economic Development
- Economic growth means change in value of goods and services over time normally for a period of one year. Economic growth means changes in the socio-economic structure of country that relates to growth to human development indexes (HDIs), decrease in equality, changes ins standard of living of public.
- Economic growth is measured through gross domestic product (GDP), GDP per capita, gross national product (GNP), and net national product (NNP). Economic development is measured through human development index (HDI), gender-related index (GDI), human poverty index (HPS), literacy rate, infant mortality, socio-economic development.
- Economic growth brings only quantitative changes in the economy while economy development brings both qualitative and quantitative changes in the economy.
- To measure the performance of two countries economic growth is used as a parameter while economic growth is only used to measure the progress of developing countries or nations.
- Economic growth deals with the change in the country’s economy output while economic development deals with the structural changes in the economy.