ECONOMIC GROWTH AND ECONOMIC

DEVELOPMENT
• Economic growth means increase in output or production.
• Economic development means both more output or
production and changes in the technical and institutional
arrangements by which factors of production are produced
and distributed.
ECONOMIC DEVELOPMENT
Economic growth and economic development are often used
interchangeably. However, there are distinctions between two
concepts.

Low Low Level of

Economic Education &
Growth Health Care

Low Level of
Low
Low Income Human
Investment
Capital

Low
Low Saving
Productivity
DEVELOPMENT
Example:

Development

Growth
ECONOMIC DEVELOPMENT

• Higher economic development requires higher economic

growth. But does not mean that a higher economic
growth automatically brings in higher economic
development. Thus we have many diverse cases of
growth and development:
1. Higher growth and higher development.
2. Higher growth but lower development.
3. Lower growth but higher development.
MEASURING DEVELOPMENT
• International bodies such as the UNO, IMF, and WB were
concerned about the development of the comparatively
underdeveloped regions of the world for which measurement of
development is required. The Idea of developing a formula was
basically facing two kinds of difficulties:

I. Level 1 is Development Factors

II. Level 2 is difficulty in quantifying a concept as development
constitutes qualitative aspects.
SOLUTION IN MEASURING DEVELOPMENT
In the year 1990 the United Nations Development Programme in its first Human
Development Report introduced the concept of Human Development Index.
MEASURING DEVELOPMENT
• Human Development Index could be considered as one possible
way of measuring development but, as per the experts, such other
determinants affecting our living conditions might be:

I. Cultural aspects of economy

II. Outlook towards aesthetic and purity of environment
III. Aspects related to the rule and administration in the economy
IV. Ethical dimension of human life
V. People’s idea of happiness and prestige.