What is the Relationship Between Economic Growth and Economic Development?


Economic growth is an accounting measure.It measures how much money is changing hands in the economy.Growth occurs when the value and number of commercial transactions increase in the country.

For example,if you cook food at home,the GDP(gross domestic product)doesn't increase.But if you eat at a restaurant,it does.Similarly,if parents raise their kids directly,GDP doesn't increase.But when parents put their kids in a day care center,then GDP increases.Thus,its only an account of the growth in the number of commercial transactions in the country.Its not a very good measure understand development of a society.It is also highly value-neutral, which can be a bad thing.

Development,on the other hand is a very political term of which changes from person to person.A good way to define it is that.Development leads to the increase in the quality of life of individuals,whether materially,socially,psychologically,politically or spiritually.All individuals have some potential and some capabilities that would enable them to achieve their potential.

Development removes the constraints that prevents individuals from unlocking their capabilities and realizing their potentials.These constraints include poverty,illetracy,lack of skills,bad health malnutrition,discrimination(caste,gender,race,ethnic,religious etc.),totalitarianism,disasters(natural or man-made)etc.Thus, development is not just about economic growth,It's about building a good society.

This good society is one where individuals are affluent,educated,highly skilled,healthy and well fed.And do not face discriminatory and political repression and are not at the mercy of natural or man-made disasters.

What is the relationship between growth and development?

Growth is only one of the means to achieving development.Growth alone cannot produce development.It can only lead to material affluence,though we don't know what the characteristics of that material affluence are.Does growth lead to equitable distribution of wealth in just 10% of the society?.Does growth lead to better education and health care for everyone?.Does growth occur in an environmentally sound manner or does it destroy the environment,making individuals susceptible to disasters?.This issue is very contentious,some economists argue that we should not worry about development and should focus on growth.Development would then automatically occur.Other economists feel that we should focus on development.And see growth as a means to development.I subscribe the latter group.Thank you.

Jonemike newshub-gh@operanewshub.com