Economic Growth and Economic Development
What is Economic Growth?
Economic growth is a sustained regular increase in total national income. This regular increase might have been brought about by an increase in the capacity to produce more goods and services.
An international measure of economic growth is a rise in gross domestic product (GDP).
What is Economic Development?
Economic development refers to improvements in the standards of living of the people. It refers to improvement in the development indicators such as health, education. living conditions, etc. A generally accepted measure of economic development (welfare) is an increase in per capita income.
Most third world countries have problems in achieving sustained secular increase in their national income. This is largely because their economies are oriented towards current consumption rather than investment.
Most of the 3rd world countries economies are characterised by extremely low investment in capital goods and thus poor productive bases.
Economic development similarly constitutes a problem in the third world countries. Income is observably unequal. Some authorities claim that about five per cent of the population, who are excessively wealthy, control over ninety-five per cent of the nations’ resources.
There is a high concentration of wealth and political power, making it practically impossible to promote an even distribution of income.
To a significant level, an improvement in economic growth resulting in a significant increase in national income ends up making the rich richer and the poor poorer.
A situation where an increase in national income does not improve the general living standards of the people is generally described as growth without development.
Two major problems face the underdeveloped countries. These are:
- The problem of initiating and sustaining economic growth.
- The problem of promoting development, that is, avoiding a situation of ‘growth without development‘.