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Difference Between Economic Growth and Economic Development

Economic Growth Vs Economic DevelopmentEconomic Growth refers to the rise in the value of everything produced in the economy. It implies the yearly increase in the country’s GDP or GNP, in percentage terms. It alludes to a considerable rise in the per-capita national product, over a period, i.e. the growth rate of increase in total output, must be greater than the population growth rate.

Economic Growth is often contrasted with Economic Development, which is defined as the increase in the economic wealth of a country or a particular area, for the welfare of its residents. Here, you should know that economic growth is an essential but not the only condition for economic development.

The economic trend in a country as a whole is the major component of its business environment. An economy whose growth rate is high provides a promising business prospect and thus builds business confidence. In this post, you will find all the substantial differences between these two.

Content: Economic Growth Vs Economic Development

  1. Comparison Chart
  2. Definition
  3. Key Differences
  4. Video
  5. Example
  6. Conclusion

Comparison Chart

Basis for ComparisonEconomic GrowthEconomic Development
MeaningEconomic Growth is the positive change in the real output of the country in a particular span of time.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.
ConceptNarrowBroad
ScopeIncrease in the indicators like GDP, per capita income etc.Improvement in life expectancy rate, infant mortality rate, literacy rate and poverty rates.
TermShort term processLong term process
Applicable toDeveloped EconomiesDeveloping Economies
How it can be measured?Upward movement in national income.Upward movement in real national income.
Which kind of changes are expected?Quantitative changesQualitative and quantitative changes
Type of processAutomaticManual
When it arises?In a certain period of time.Continuous process.

Definition of Economic Growth

Economic Growth is defined as the rise in the money value of goods and services produced by all the sectors of the economy per head during a particular period. It is a quantitative measure that shows the increase in the number of commercial transactions in an economy.

Determinants of Economic Growth

Economic growth can be expressed in terms of gross domestic product (GDP) and gross national product (GNP), which helps in measuring the size of the economy. It lets us compare in absolute and percentage change, i.e. how much an economy has progressed since last year. It is an outcome of the increase in the quality and quantity of resources and advancement of technology.

Definition of Economic Development

Economic Development is defined as the process of increase in volume of production along with the improvement in technology, a rise in the level of living, institutional changes, etc. In short, it is the progress in the socio-economic structure of the economy.

Human Development Index (HDI) is the appropriate tool to gauge the development in the economy. Based on the development, the HDI statistics rank countries. It considers the overall development in an economy regarding the standard of living, GDP, living conditions, technological advancement, improvement in self-esteem needs, the creation of opportunities, per capita income, infrastructural and industrial development, and much more.

Key Differences Between Economic Growth and Economic Development

The fundamental differences between economic growth and development are explained in the points given below:

  1. Economic growth is the positive change in the real output of the country in a particular span of time economy. 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.
  2. Economic growth is one of the features of economic development.
  3. Economic growth is an automatic process. Unlike economic development, which is the outcome of planned and result-oriented activities.
  4. Economic growth enables an increase in the indicators like GDP, per capita income, etc. On the other hand, economic development enables improvement in the life expectancy rate, infant mortality rate, literacy rate, and poverty rates.
  5. 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.
  6. Economic growth is a short-term process that takes into account the yearly growth of the economy. But if we talk about economic development it is a long-term process.
  7. Economic Growth applies to developed economies to gauge the quality of life, but as it is an essential condition for development, it applies to developing countries also. In contrast, economic development applies to developing countries to measure progress.
  8. Economic Growth results in quantitative changes, but economic development brings both quantitative and qualitative changes.
  9. Economic growth can be measured in a particular period. As opposed to economic development is a continuous process so that it can be seen in the long run.

Video: Economic Growth Vs Economic Development

Example

To understand the two terms, we will take an example of a human being. The term growth of human beings simply means the increase in their height and weight which is purely physical. But if you talk about human development, it will take into account both the physical and abstract aspects like maturity level, attitudes, habits, behaviour, feelings, intelligence, and so on.

In the like manner, growth of an economy can be measured through the increase in its size in the current year in comparison to previous years, but economic development includes not only physical but also non-physical aspects that can only be experienced like improvement in the lifestyle of the inhabitants, increase in individual income, improvement in technology and infrastructure, etc.

Conclusion

After the above discussion, we can say that economic development is a much bigger concept than economic growth. In other words, the economic development includes economic growth. As the former uses various indicators to judge the progress in an economy as a whole, the latter uses only specific indicators like gross domestic product, individual income etc.

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Comments

  1. Shyam says

    March 10, 2016 at 10:04 am

    Thanks for the clear explanation.

    Reply
  2. ROOBEE SINGH says

    March 30, 2016 at 12:38 pm

    THANK FOR YOUR BROAD AND UNDERSTANDABLE EXPLANATION

    Reply
  3. Usman.aziz says

    March 31, 2016 at 6:25 pm

    Very well explained , thank you

    Reply
  4. Aleng Agiu says

    April 28, 2016 at 7:04 am

    Am satisfied with your broad explanation and clarification, thanks

    Reply
  5. JASSEDA JOSHUA WILLIAM says

    August 4, 2016 at 2:42 pm

    Thanks for ur explanation on that

    Reply
  6. chidubem ezeh says

    September 9, 2016 at 10:56 pm

    Thanks for the explanation using human growth.

    Reply
  7. Venkey says

    October 30, 2016 at 10:15 pm

    Thanks for your post. I got a clear picture.

    Reply
  8. Pragati soni says

    February 15, 2017 at 12:28 am

    Well explained..it really helped me a loy…thank you

    Reply
    • Surbhi S says

      February 15, 2017 at 9:58 am

      Thank you so much to all the readers for appreciating the article, it means a lot to us.

      Reply
  9. UBAID says

    March 31, 2017 at 7:17 pm

    Very well explanation, thank you

    Reply
  10. keene says

    July 10, 2017 at 10:49 am

    Nice. I read it before exam

    Reply
  11. Prashant says

    July 23, 2017 at 3:51 pm

    Thank You so much
    for clear understanding

    Reply
  12. Oyeleke says

    July 26, 2017 at 1:56 pm

    Thanks for removing the mix-ups.

    Reply
    • Surbhi S says

      July 26, 2017 at 2:07 pm

      Thanks to all the readers for appreciating the article, keep sharing.

      Reply
  13. Batul says says

    August 13, 2017 at 2:24 pm

    A very helpful article. Thanx for sharing.
    It consist of simple language, useful, basic and understandable terms

    Reply
  14. Ajit Singh says

    September 8, 2017 at 8:12 am

    very well explained. God bless you

    Reply
  15. Amanullah says

    October 23, 2017 at 12:45 am

    Thank you so much

    Reply
  16. Erick Odhiambo says

    January 17, 2018 at 1:03 pm

    Marvelous explanation,,,, I love this

    Reply
  17. Peter Mazedi says

    April 25, 2018 at 10:12 pm

    Thank you very much for the easy and clear explanation, be blessed.

    Reply
  18. Tendai says

    May 12, 2018 at 9:35 am

    Thank you for the clear explanation

    Reply
  19. Kevin says

    June 23, 2018 at 9:33 pm

    It is excellent

    Reply
  20. aryan says

    August 12, 2018 at 8:33 pm

    Too good mam,
    This article is best and explained step-by-step.
    thank u.

    Reply
  21. Nassy says

    October 15, 2018 at 11:14 pm

    Explicitly perfect.. thank you for using simple but concise examples and terms.

    Reply
  22. ellen says

    October 25, 2018 at 2:20 pm

    Thank you for providing easy to understand explanations of every topic and term. God bless you.

    Reply
  23. James says

    November 17, 2018 at 3:03 pm

    Real appreciate your explanation.,.,.,.,..,.,.,.,.,. Expand much my knowledge

    Reply
  24. Mahmoud A. Ramadan says

    November 21, 2018 at 6:19 pm

    Thanks a million!

    Reply
  25. richard samuel mollel says

    December 8, 2018 at 11:58 am

    personally, I really appreciate your tough and attractive explanation of these two economic concepts

    Reply
  26. Yusuf Wasiu Adisa to says

    December 27, 2018 at 12:56 am

    Thanks so darely for this down to earth explanation of the two concepts. More interesting is that familiar but comprehensive example of the human anatomy.

    Reply
  27. Dawit D says

    October 3, 2019 at 7:04 pm

    Thank you for your brief and clear explanation!

    Reply
  28. Aman Rai says

    November 29, 2019 at 12:31 am

    Really You Make us understand. Very well

    Reply
  29. Bello Usman says

    February 8, 2020 at 4:35 pm

    Well explained

    Reply
  30. moti maya lama says

    September 11, 2020 at 11:38 am

    yeahhh…helpedddddd

    Reply
  31. Bishal Baral says

    March 14, 2021 at 6:04 pm

    very nicely…
    the explanation is awesome.. ❤️❤️

    Reply
  32. Laura says

    April 23, 2022 at 2:37 am

    Thanks its relly helpfull ❤💕💓💓💓💞

    Reply
  33. Daingihe Jay Jay says

    June 4, 2022 at 3:03 pm

    I acknowledge your clear and well explanation. Indeed, this is intangible asset you have shared with us. Thank you

    Reply
  34. Turdialiev Shavkatillo says

    June 28, 2022 at 1:13 pm

    Thank you for usufull explanation. it would be great knowladge for me in the future

    Reply
  35. Teemah says

    April 6, 2023 at 2:01 pm

    Wow…Thanks for the broad explanatory it really helps

    Reply
  36. habib saad says

    September 22, 2023 at 10:48 pm

    thanks ! I really appreciate it, I have learned

    Reply

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