Growth occurs when the value and number of commercial transactions increase in the economy. Economic growth and economic development are two words which are usually mixed by the people and more often used interchangeably. Economic Growth is often contrasted with Economic Development, which can be defined as the increase in the economic wealth of an economy or nation, for the welfare of its residents. Economic growth is a conservative concept and it denotes the rise in a nations’ actual level of output on account of the rise in quality of resources whereas economic development is comparatively a normative concept, and it denotes the enhancement in the standard of living of an individual, and self-esteem needs. Economic growth does not consider the Income from the Informal Economy. Difference between economic growth and development in terms of government support can be that economic growth does not necessarily require intervention from the government as it is an automatic process. The fundamental differences between economic growth and development are explained in the points given below: Economic growth is the positive change in the real output of the country in a particular span of time economy. Economic Development vs Growth • In the study of economics, economic growth is taken as a quantitative measure while development is both a quantitative as well as a qualitative measure which makes it difficult to quantify. Increase in the indicators like GDP, per capita income etc. Filed Under: Essays Tagged With: economy. THE DIFFERENCES BETWEEN “ECONOMIC GROWTH” AND “ECONOMIC DEVELOPMENT” Kevin Bucknall WHY ARE WE INTERESTED IN THE DIFFERENCE? Very often, when talking about the economy of a country or nation is remarkable the large number of people who are confused or do not understand the difference between economic growth and economic development, however, this is no cause for wonder, … Economic growth can be measured when there is a positive change in the national income, whereas economic development can be seen when there is an increase in real national income. ALL RIGHTS RESERVED. • One can get the economic growth of a country by comparing its GDP at present with the GDP last year. Depletion of resources such as pollution, congestion & disease. But, economic development is profoundly affected by the government made policies for development in various sectors. • We need to understand the processes of each better; it is useful information. It is concerned with both income and structural changes. an increase in luxury goods and education. Economic development is a much broader concept than economic growth. it applies in the context of people's sense of morality (right and wrong, good and bad). Economic growth does not consider the Income from the Informal Economy. the growth rate of increase in total output should be greater than the population growth rate. Economic Growth is a narrower concept than economic development.It is an increase in a country’s real level of national output which can be caused by an increase in the quality of resources (by education etc. When we talk about development, it is usually focused on “economics”. in … Economic growth is a short-term process which takes into account yearly growth of the economy. Development alleviates people from low standards of living into proper employment with suitable shelter. Economic Development refers to the increase of the Real. Economic growth in the UK Economic growth measures an increase in Real GDP (real output). It only takes into account the value of goods and services produced in the economy. What is Difference between Economic Development and Economic Growth? From such simple definitions we find that economic development is a qualitative term while economic growth is a quantitative term. In contrast to, economic development applies to developing countries to measure progress. The two-argument provided above are also valid for the shortcomings of growth. ADVERTISEMENTS: The upcoming discussion will update you about the differences between economic growth and economic development. Economic growth is the subset of economic development. Growth and development were thought to be synonymous. According to Paul Baron, “Economic growth may be defined as an increase over time in per capita output of material goods.” In other words, growth of gross national output or per capita output is an indicator of economic growth. Economic Development is considered as a Multidimensional phenomenon because it focuses on the income of the people and on the improvement of the living standards of the people of the country. Development economics emerged as a distinct field of study during the post-World War II. On the other hand, economic development enables improvement in the life expectancy rate, infant mortality rate, literacy rate and poverty rates. Economic progress means change in price of merchandise and suppliers over time normally for a interval of 1 yr. Economic progress means modifications inside the socio-economic development of nation that pertains to progress to human development indexes (HDIs), decrease in equality, modifications ins way of life of public. The growth is usually expressed using the Gross Domestic Product GDP. It alludes to a considerable rise in the per-capita national product, over a period, i.e. Economic Development vs. Growth. Moreover, it is attached with the increase in the efficiency of the factors of production. HDI (Human Development Index), gender-related index, Human poverty index, infant mortality, literacy rate etc. Economic Growth: The term economic growth refers to the quantitative aspect of economic progress of a country. Economic Development uses various indicators to measure the progress in an economy as a whole, however, Economic growth uses only specific indicators like the gross domestic product, individual income, etc for the calculation. In this way, economic theory formed the basis on the basis of certain decisions are made that are used for regulating and directing the reproduction. Economic Development involves rise in the level of production in an economy along with the advancement of technology, improvement in living standards and so on. Economic Growth is a monetary concept. (4) Discontinuous Change (5) Growth is possible without development (6) Determinant of economic growth may be economic development. The Concept of Economic Growth and Development Economic growth include changes in material production and during a relative short period of time, usually one year. 1. However, Economic Development can be measured through Improvement in the life expectancy rate, infant mortality rate, literacy rate, and poverty rates. Privacy, Difference Between Economic and Non-Economic Activities, Difference Between Sales and Business Development, Difference Between Developed Countries and Developing Countries, Difference Between Training and Development, Difference Between Deflation and Disinflation. The standard of living includes various things like safe drinking water, improve sanitation systems, medical facilities, the spread of primary education to improve literacy rate, eradication of poverty, balanced transport networks, increase in employment opportunities etc. For example, a third world country may be suffering economic recession (decreasing total incomes) while attempts at economic development are taking place. The term economic development is different from economic growth; economic growth is mainly related to the rate of change in national income or GDP. But economic development is associated with qualitative and quantitative changes in various aspects of human life. But if we talk about economic development it is a long term process. Economic development is a normative concept i.e. It is a qualitative process, involving the development of an economy's economic and social infrastructure. Economic growth generally follows economic development. Economic Growth can be measured by an increase in a country's GDP (gross domestic product). By closing this banner, scrolling this page, clicking a link or continuing to browse otherwise, you agree to our Privacy Policy, 250+ Online Courses | 1000+ Hours | Verifiable Certificates | Lifetime Access, Finance for Non Finance Managers Course (7 Courses), US GAAP Course (29 Courses with 2020 Updated), Objectives of Financial Statement Analysis, Limitations of Financial Statement Analysis, Memorandum of Association vs Article of Association, Financial Accounting vs Management Accounting, Positive Economics vs Normative Economics, Absolute Advantage vs Comparative Advantage, Chief Executive Officer vs Managing Director, Finance for Non Finance Managers Certification. You may also have a look at the following articles to learn more, All in One Financial Analyst Bundle (250+ Courses, 40+ Projects). Here we also discuss the Economic Growth vs Economic Development key differences with infographics, and comparison table. Economic Development is a broader concept than the Economic Growth. For the growth of economically, the government needs to … (2) Quantitative Changes-Change in national and per capital income. Economic Growth applies to developed economies to gauge the quality of life, but as it is an essential condition for the development, it applies to developing countries also. Economic Development can create more opportunities in the sectors of education, healthcare, employment and the conservation of the environment. Whereas, Economic Development takes consideration of all activities, whether formal or informal and eases people with low standards of living a suitable shelter and with proper employment. © 2020 - EDUCBA. 11. Start Your Free Investment Banking Course, Download Corporate Valuation, Investment Banking, Accounting, CFA Calculator & others. Improvement in life expectancy rate, infant, literacy rate, poverty rates, and mortality rate. Also Check: Human Capital on Economic Growth What is Economic Development? On the contrary, economic development is multi-dimensional. Economic Growth is the positive change in the real output of the country in a particular span of time. Key Differences. 1 page, 317 words. Difference Between Joint Venture and Strategic Alliance, Difference Between Thesis and Dissertation, Difference Between Cost Control and Cost Reduction, Difference Between Autobiography and Memoir, Difference Between Banker’s Cheque (Pay Order) and Demand Draft, Difference Between Micro and Macro Economics, Difference Between Management and Administration, Difference Between Qualitative and Quantitative Research, Difference Between Discipline and Punishment, Difference Between Hard Skills and Soft Skills, Difference Between Internal Check and Internal Audit, Difference Between Measurement and Evaluation, Difference Between Percentage and Percentile, Difference Between Journalism and Mass Communication, Difference Between Internationalization and Globalization, Difference Between Sale and Hire Purchase. Economic Growth is related to developed countries of the world. Where a gross domestic product (GDP) is adjusted by inflation. They both Economic Growth vs Economic Development have different indicators for their measurement. Fundamental Differences Between Economic Growth and Economic Development Economic growth is the positive change in the real output of the country in a particular span of time economy. Here, you should know that economic growth is essential but not the only condition for economic development. Whereas, Economic Development is the increase in the level of production in an economy along enrichment of living standards and the advancement of technology. Economic growth can be measured in terms of the increase in the aggregate market value of additional goods and services produced, using economic concepts such as GDP and GNP. Economic Growth is considered as a single dimensional in nature as it only focuses on the income of the people of the country. Both Economic Growth vs Economic Development are popular choices in the market; let us discuss some of the major Difference Between Economic Growth and Economic Development: Economic Growth is the increase in the real output of the country in a particular span of time. Quality of living standard is the major indicator of economic development. However, Economic Development is concerned with Sustainability, which means meeting the needs of the present without compromising. Economic growth is the increase in goods & Services produced by an economy or nation, considered for a specific period of time. 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. • We need to know in order to advise governments on policies and what they can do to improve their performance. Economic growth is single dimensional which is concerned with increase in national and per capita income. Economic Growth versus Economic Development. To know the distinction between the terms economic growth and economic development we can take the growth of person as example. Difference Between Economic Growth and Economic Development. Economic Development is the process focusing on both qualitative and quantitative growth of the economy. Growth in the size of the body may be compared to economic growth whereas changes in the individuality, social, mental attitudes may be compared to economic development. GDP is a measure of the national income / national output and national expenditure. Economic Growth results in quantitative changes, but economic development brings both quantitative and qualitative changes. Brings a quantitative impact on the economy. The difference between Economic Growth and Economic Development is that economic growth expresses the growth in the real national income, whereas, on the other hand, economic development expresses the improvement in the living standards of … Development economics then appeared to be’ a bastard child of growth econo­mics’ (J. Economic growth is an automatic process. Economic Growth refers to the rise in the value of all the products produced in the economy. Differences between Economic Growth and Development The difference can be summarized in the below points: Economic growth is a narrow concept (It studies only increase in real per capita income) while economic development is a broad concept (it studies increase in real per capita income as well as economic welfare). It measures how much money is changing hands in the economy. Difference Between Economic Growth and Development 1. Economic Growth is a narrower concept than economic development. … The growth without development is not important. Both Economic Growth vs Economic Development are popular choices in the market; let us discuss some of the major Difference Between Economic Growth and Economic Development: Below is the topmostComparison between Economic Growth vs Economic Development are as follows –, Economic development = Economic Growth + Standard of Living. The Informal economy is unrecorded economic activity. THE CERTIFICATION NAMES ARE THE TRADEMARKS OF THEIR RESPECTIVE OWNERS. Whereas, Economic Development is the increase in the level of production in an economy along enrichment of living … After examining the above information, we can say that Economic Growth is a subset of Economic development. Economic Growth does not reflect the depletion of natural resources. What is Economic Growth? Governments are under pressure due to the environmental issues, majorly the problem is due to Global warming. Economic growth indicates the expansion of the Gross Domestic Product (GDP) of the country and the concept of Economic Growth is basically related to the developed countries. Economic Growth is the increase in the real output of the country in a particular span of time. Economic Growth is the increase in the real output of the country in a particular span of time. It indicates an increase in the per capita income of every citizen. Economic Growth can be measured through an increase in the GDP, per capita income, etc. Economic growth is an accounting measure. Economic development refers to the process of structural change needed in an economy for economic growth to occur. Economic Development is related to Underdeveloped and developing countries of the world. It can be measured as a percentage increase in real gross domestic product. Economic growth is necessary but not enough to achieve economic development. However, these two topics of economics are far different from each other and have contrasting meaning. Difference between Economic Growth & Economic Development. Economic growth and Development 2. Economic growth, however, has a much narrower outlook of than economic development, in that; it refers to the increase in the value of products from the various sectors involved in the economy of a nation. Meanwhile, economic development is the outcome of planned and result-oriented activities. So, economic growth is often a trailing indicator of economic development. Economic Development is a bigger concept than economic growth. Economic Development involves a rise in the level of production in an economy along with the advancement of technology, improvement in living standards and so on. Improvement in life expectancy rate, infant mortality rate, literacy rate and poverty rates. Economic growth is a much narrower concept when compared to Economic Development. The word development and economic development are used interchangeably when you talk about the well-being of a country. It indicates the yearly increase in the country’s GDP or GNP, in percentage terms. Corporate Valuation, Investment Banking, Accounting, CFA Calculator & others, This website or its third-party tools use cookies, which are necessary to its functioning and required to achieve the purposes illustrated in the cookie policy. ADVERTISEMENTS: (7) Solution of the … It measures all the aspects which include people in a country become wealthier, healthier, better educated, and have greater access to good quality housing. Difference between economic growth and economic development. of economic development. Unlike economic development, Economic growth is an automatic process. Economic growth can be measured in a particular period. 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. The following are some of the major differences between Economic development and Economic growth: In economical growth government mainly work on educational and health systems. The economic growth represents increase in the production of goods and services of a country. This has a been a guide to the top difference between Economic Growth vs Economic Development. GDP is the market value of final goods & services which is produced in an economy or nation. Economic development is related to the increasing level of income in a society or a country, and its related increase in savings, consumption and investment. It can be measured by the Human Development Index, which considers the literacy rates & life expectancy which affect productivity and could lead to Economic Growth. Difference between Economic Growth and Economic Development Key Difference: Economic growth refers to a capacity of a produce goods and services, compared from one period of time to another. It basically measures the total volume of goods and services produced in an economy. 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