Though growth and development sounds the same, there are some differences between them in terms of economic. And Growth is actually a part of Development. Growth refers to the increase in number and size while Development means an improvement of circumstances. I would like to describe some theories of Economic Growth before we go to Economic Development. In Rostow’sGrowth Theory, there are 5 stages:
A. Traditional Society.
B. Pre conditions for Takeoff.
C. Take Off.
D. Drive to Maturity.
E. Age of High mass Consumption.
A. Traditional Society
A Traditional society according to him, as one whose structure is
developed within limited production functions based on Pre Newtonian science
and technology. They are normally Agriculture dominated societies and lack of science and technology. They also don't have the Systematic use of science and
technology. In that case, economic changes could be made
possible through more land can be brought under cultivation. Pattern of trade and commerce can
be including farm outputs. And scale and pattern of trade and
commerce can be expanded by increase in agricultural productivity. B. Pre conditions for Takeoff
This is 2nd stage of Economic growth and in this stage Pre Condition for sustained
growth created. This would also be described as Transitional era. Such conditions developed in
Europe at the end of 15th century, at the end of medieval age and started
of modern age. C. Take Off
Take off is the interval during
which the era of investment increases in such a way that real out put per ca-pita increases significantly. This initial increase carries
with it radical changes in the techniques of production and the disposition of
the income flows. Investment increases, rise per ca-pita out put. At this stage, Growth becomes normal condition.
The traditional values, habits and an institutions completely changes due
course of modernization.Industrial revolution lasts for two to three decades.Economic growth
becomes common and automatic phenomenon. Take off is initiated by a sharp
stimulate either political or industrialrevolution which affects the economic and social institutions.
Here are the conditions for take-off:
- As the period when society has
effectively applied the range of modern technology to the bulk of its
resources.
- This stage refers to the need for
the economy itself to diversify.
- The sector which are initial
leading replaces by the other sectors.
- Some 10 to20 % of the national
income is steadily invested. D. Drive to Maturity
This is the period when society has
effectively applied the range of modern technology to the bulk of its
resources. This stage refers to the need for
the economy itself to diversify. The sector which are initial
leading replaces by the other sectors. Some 10 to 20 % of the national
income is steadily invested. At this stage, Import decreases and replace by
home indigenous production. New commodities exportedto match them. Reduction in poverty and rising
standard of living can be seen. There is no necessary of sacrificing
the comfort to gain momentum and strengthening of certain sectors. E. Age of High mass Consumption This stage refers to the period
of contemporary comfort afforded in many Western nations. Leading sectors shift towards the
durable consumer goods and services. Real income per head rises
significantly. Large number of persons gained
command over consumption which transcended basic foods, shelter and clothing. Use of automobiles, electric
powered household gadgets, luxurious goods increase. Structure of working force
changed. Increase in urbanization. Skill oriented jobs. Allocation of resources for
welfare of the society and environment concerns. ............................................................... However Economic growth in an economy demonstrated by an outward shift in its Production Possibility Curve (PPC). Another way to define growth is the increase in a country’s total output or Gross Domestic Product (GDP). It is the increase in a country’s production. A country’s economic development is usually indicated by an increase in citizens’ quality of life. ‘Quality of life’ is often measured using the Human Development Index, which is an economic model that considers intrinsic personal factors not considered in economic growth, such as literacy rates, life expectancy and poverty rates.
'Economic development' is a process in which a nation is being improved in the sector of the economic, political, and social well-being of its people. The term has been used frequently by economists, politicians, and others in the 20th and 21st centuries. The concept, however, has been in existence in the West for centuries. "Modernization, "westernization", and especially "industrialization" are other terms often used while discussing economic development. Economic development has a direct relationship with the environment and environmental issues. Economic development is very often confused with industrial development, even in some academic sources.
Whereas economic development is a policy intervention endeavor with aims of improving the economic and social well-being of people, economic growth is a phenomenon of market productivity and rise in GDP. Consequently, as economist Amartya Sen points out, "economic growth is one aspect of the process of economic development".
-The finality of growth and development is the improvement of the standard and quality of
life;
-Growth and development are cause and result of the general trend, influencing its rhythm
and ensuring passages from one level to the other.
The differences between economic growth and development refer to the fact that, while economic
growth concerns the quantitative side of economic activity (the increase of results, of quantities, of
sizes), development has a larger scope, including qualitative changes that take place in economy and
society. In fact,development is a qualitatively higherstep of macro-economic evolution. Weoften
referto growth theorieswhen we speakaboutthe developed countriesand to the theoriesof
development when we approachtheeconomicproblemsthat are specific to the developing or less
developed countries.
There are similarities and differences between economic growth and economic development. Similarities refer to the fact that: -Growth and development are continuous processes, with stimulating effects in economy; -Both processes involve the allotment and utilization of resources and the increase of efficiency; -The finality of growth and development is the improvement of the standard and quality of life; -Growth and development are cause and result of the general trend, influencing its rhythm and ensuring passages from one level to the other.
The differences between economic growth and development refer to the fact that, while economic growth concerns the quantitative side of economic activity (the increase of results, of quantities, of sizes), development has a larger scope, including qualitative changes that take place in economy and society. In fact, development is a qualitatively higher step of macro-economic evolution. We often refer to growth theories when we speak about the developed countries and to the theories of development when we approach the economic problems that are specific to the developing or less developed countries.
International trade and exchange rates are a key issue in economic development. Currencies are often either under-valued or over-valued, resulting in trade surpluses or deficits. Furthermore, the growth of globalization has linked economic development with trends on international trade and participation in global value chains (GVCs) and international financial markets. The last financial crisis had a huge effect on economies in developing countries. Economist Jayati Ghosh states that it is necessary to make financial markets in developing countries more resilient by providing a variety of financial institutions. This could also add to financial security for small-scale producers.
Growth occurs when
There is a discovery of new mineral/metal deposits.
There is an increase in the number of people in the workforce or the quality of the workforce improves. Example: training and education.
There is an increase in capital and machinery.
There is an improvement in technology.
Development occurs when
Measures of economic development will look at:
An increase in real income per head – GDP per capita.
The increase in levels of literacy and education standards.
Improvement in the quality and availability of housing.
Improvement in levels of environmental standards.
Increased life expectancy.
We can also have a situation where there is growth and development, i.e. increase in luxury goods and education.
Development alleviates people from low standards of living into proper employment with suitable shelter. Economic Growth does not take into account the depletion of natural resources which might lead to pollution, congestion & disease. Development, however, is concerned with sustainability which means meeting the needs of the present without compromising future needs.
A. Economic Growth
Growth is an increase in the country’s output.
B. Development
Development is an improvement in factors such as health, education, literacy rates and a decline in poverty levels.
We will start by defining Economic growth and development. Having economic growth without economic development is possible.
Economic growth in an economy is demonstrated by an outward shift in its Production Possibility Curve (PPC). Another way to define growth is the increase in a country’s total output or Gross Domestic Product (GDP). It is the increase in a country’s production.
A country’s economic development is usually indicated by an increase in citizens’ quality of life. ‘Quality of life’ is often measured using the Human Development Index, which is an economic model that considers intrinsic personal factors not considered in economic growth, such as literacy rates, life expectancy and poverty rates.
Growth Occurs When
There is a discovery of new mineral/metal deposits.
There is an increase in the number of people in the workforce or the quality of the workforce improves. Example: training and education.
There is an increase in capital and machinery.
There is an improvement in technology.
Development Occurs When
Measures of economic development will look at:
An increase in real income per head – GDP per capita.
The increase in levels of literacy and education standards.
Improvement in the quality and availability of housing.
Improvement in levels of environmental standards.
Increased life expectancy.
Difference between Economic Growth and Economic Development
We can also have a situation where there is growth and development, i.e. increase in luxury goods and education.
Development alleviates people from low standards of living into proper employment with suitable shelter. Economic Growth does not take into account the depletion of natural resources which might lead to pollution, congestion & disease. Development, however, is concerned with sustainability which means meeting the needs of the present without compromising future needs.
A. Economic Growth
Growth is an increase in the country’s output.
B. Development
Development is an improvement in factors such as health, education, literacy rates and a decline in poverty levels.
Change in Development
The Relationship between Inequality and Economic Growth
Poverty has come down most when inequality has fallen, and there is high economic growth. Initial low levels of inequality are associated with more negative elasticities of poverty reduction concerning growth. Higher initial inequality results in less effect on poverty with an increase in economic growth.
1. Savings rate
The marginal savings rate changes with decreasing or increasing income. The marginal savings rate is the fractional decrease in saving that results from a decrease in income.
2. Credit market constraints
The poor can’t get loans.
3. Political economy
Governments pursue poor policies (redistribution policies) trying to reduce inequality which results in high inflation, high deficit, and lower growth. However, there doesn’t seem to any relationship between inequality and economic growth empirically. But, higher economic growth leads to lower levels of poverty (not the same as inequality)
Growth Effect
The positive growth of people’s income and no change in income leads to a decrease in the poverty level.
Redistribution Effect
If there is a rise in inequality and mean income remains constant, then poverty will rise.
Although many people assume growth and development to be the same, there is a significant difference between growth and development. However, growth is often a part of development. Growth refers to the increase in size and number whereas development refers to an improvement of circumstances. This is the main difference between growth and development.
This article will explore,
1. What Does Growth Mean – Definition, Meaning, Features, Examples
2. What Does Development Mean – Definition, Meaning, Features, Examples
3. What is the difference between Growth and Development?
What Does Growth Mean
Growth typically refers to an increase in size or number. This increase is often measurable. For example, a tree can grow. Its growth can be measured from its height. Similarly, an organization can also grow by adding more staff or other organizations to it. Profit of a company can also grow. For more examples, look at the following sentences.
Everyone was amazed at the growth of the company.
Jake had a growth spurt when he was 15 years old – he grew taller than all his older brothers.
The growth of the plants and trees are affected by the weather.
There is a 16% growth in this year’s profits.
He looked like a ruffian, with several day’s growth of beard.
The fertility of the land and rainfall affect the growth of the crops.
The finance minister refused to comment on the economic growth of the country.
What Does Development Mean
Development mainly refers to progress and improvement. It often encompasses a growth as well as an improvement of circumstances. Development is a qualitative measure. Thus, when something develops, the quality of that thing also improves. If a tree develops, its changes will not only be the size – it will stay healthy, bear fruits and continue growing. The same applies to a child or a company. Thus, development refers to the overall changes and the progressive changes of a thing.
The following examples will help you to understand the meaning of this noun more clearly.
A balanced diet and exercise are imperative for the development of muscles.
The president was very interested in the economic development of the country.
The illustrations in the book show the development of a baby inside a mother’s womb.
Personal development is the primary aim of education, not wealth or status.
Brain drain is the greatest obstacle to the development of the country.
The economic development of this company astonished many financial analysts.
The development of a child’s mind is fascinating to observe.
Difference Between Growth and Development
Meaning
Growth: Growth refers to the increase in size and number.
Development: Development refers to an improvement in circumstances.
Measure
Growth: Growth has a quantitative measure.
Development: Development has a qualitative measure.
Interrelation
Growth: Growth basically refers to the increase in size and number.
Development: Development encompasses overall changes including growth and other progressive changes.
