The terms ‘economic growth’ and ‘economic development’ sound similar. However, the two concepts are different. While economic growth is a quantitative concept, economic development is both a qualitative and qualitative concept. However, Economic development cannot be achieved without economic growth. Let us study here how they are different from each other.
What is Economic Growth?
Economic growth can be defined as the increase in the monetary value of all the goods and services produced in the economy during a period. Growth is a quantitative measure that reflects the potential increase in the number of business transactions taking place in the economy.
What is Economic Development?
Economic development is a much broader concept. It focuses on income, social welfare, and other dimensions. It is both a Quantitative and Qualitative Concept. Indicators of economic development are literacy rate, poverty ratio, etc.
The growth and development of a country are based on numerous parameters such as Real GDP, Real per capita income, the creation of job opportunities, technological advancements, the standard of living, quality of life, social indicators like health education, poverty levels, industrial and infrastructural development, etc. The major differentiation between economic development and economic growth is shown in the following chart.
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Economic Development |
Economic Growth |
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Economic development is a much broader concept. It refers to the overall development of the quality of life in a nation, which includes economic growth. |
Economic growth is a narrower concept. It denotes to an increase in the production of goods and services of a country |
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It is both Quantitative and Qualitative Concept. |
It is a type of quantitative measure. Traditionally, aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP), although alternative metrics are sometimes used. |
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Economic development is a ‘Multidimensional’ concept as it focuses on income, social welfare and other dimensions. |
Economic growth is considered one-dimensional as it focuses only on income. |
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Long-term process |
Short-term process |
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Economic Development refers to the overall development of the quality of life in a nation, including economic growth. |
The economic growth of a country is measured by an increase in the monetary growth in a particular period. |
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Economic development cannot be achieved without economic growth. |
It is possible even without economic development. |
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The economic development of a country needs Government support. This is because all the developmental policies are formed by the government |
Economic growth is an automatic process that may or may not require intervention from the government |
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Applicable to developed economies |
Applicable to developing economies |
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Human Development Index (HDI), per capita income, industrial development, literacy rate, poverty ratio, etc. are examples of Economic development. |
Real GDP, Real per capita income, etc. are examples of economic growth |
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