In ordinary discussion, people use Economic growth and economic development interchangeably. But economists argue that economic development is not identical with growth. These are two slightly different concepts which Easyshiksha will decribe below.
Economic growth may be defined as a sustained increase in its population and product per capita. But economic development is not the same thing as economic growth. Economic development implies progressive changes in the socio-economic structure of a country. Economic growth implies not only more output, but also more inputs and more efficiency, i.e., an increase in output per unit of input, or, in other words, an increasing productive capacity of the economy. Development, however, is something more than that. It is ‘growth plus change’. Development implies changes in the structure of output and in the allocation of inputs by sectors.
It follows from this definition that economic development encompasses social, political and cultural development of a country. Clearly, it is a value-based concept or a normative concept. It includes not only sustained rise in gross (or net) per capita national product but also includes welfare of masses, reduction in income inequality, increase in employment opportunities, and so on.
Thus, economic growth is a quantitative concept while economic development is a qualitative con¬cept. Economic development may be defined “as the process of increasing the degree of utilization and improving the productivity of available resources of a country which leads to an increase of the economic welfare of the community by stimulating the growth of national income.” Economic growth, indeed, is not concerned with the poverty-inequality reduction, unemployment situation and, above all, better quality of living. Thus, economic development is more than econo¬mic growth.
Economic growth and economic development are, thus, not synonymous. Economic growth may be a necessary condition for economic development of countries, but it is not a sufficient condition.