ECONOMIC GROWTH

AND DEVELOPMENT
 ECONOMIC GROWTH
- is the increase in the inflation-
adjusted market value of the
goods and services produced by
an economy over time.
 GENERATING ECONOMIC GROWTH

There are only a few ways to generate economic

growth
1. discovery of new or better economic resources.
2. grow the labor force.
3. create superior technology or other capital
goods.
4. increased specialization.
 ECONOMIC DEVELOPMENT

- the process by which a nation

improves the economic,
political, and social well-being
of its people.
INDICATORS OF
ECONOMIC GROWTH
AND DEVELOPMENT
 INDICATORS

ECONOMIC
ECONOMIC ECONOMIC
ECONOMICDEVELOPMENT
GROWTH
GROWTH DEVELOPMENT
developed Human Development
developing Index
countries countries
Real GDP (HDI)
Real PCI PQLI (Physical Quality of Life
Index)
DIFFERENCE BETWEEN
ECONOMIC GROWTH
AND DEVELOPMENT
 MEANING

ECONOMIC ECONOMIC
GROWTH DEVELOPMENT
Implies change in income, savings
refers to an increase in real and investments along with
progressive changes in socio-
GDP output of goods and
economic structure of the country
services in the country (institutional and technological
changes)
 FEATURES

ECONOMIC ECONOMIC
GROWTH DEVELOPMENT
relates to gradual increase in one relates to growth of human capital,
of the components of Gross decrease in inequality figures, and
Domestic Product (GDP) : structural changes that improve the
consumption, government quality of life of the population
spending, investment, net exports
 MEASUREMENT

ECONOMIC ECONOMIC
GROWTH DEVELOPMENT
Qualitative measures such as
measured by quantitative factors Human Development Index (HDI),
such as increase in real GDP or gender-related index, Human
per capita income Poverty Index (HPI), infant mortality,
literacy rate etc.
 EFFECT

ECONOMIC ECONOMIC
GROWTH DEVELOPMENT
leads to qualitative as well as
brings quantitative changes quantitative changes in the
in the economy economy
 RELEVANCE

ECONOMIC ECONOMIC
GROWTH DEVELOPMENT
reflects the growth of reflects progress in the quality
national or per capita of life in a country
income
 ACHIEVE

ECONOMIC ECONOMIC
GROWTH DEVELOPMENT
possible even without not possible without growth
development
 MAJOR CONCERNS

ECONOMIC
ECONOMIC ECONOMIC
ECONOMICDEVELOPMENT
GROWTH
GROWTH DEVELOPMENT
developed developing
countries countries
developed developing
countries countries
ECONOMIC GROWTH –
DISADVANTAGES
 INFLATION RISK
If demand races ahead of aggregate
supply the scene is set for rising prices –
many of the faster-growing countries
have seen a trend rise in inflation – this is
known as structural inflation
 ENVIRONMENTAL CONCERNS:

• Fast growth can create negative externalities e.g.

noise pollution and lower air quality arising from air
pollution and road congestion
• Increased consumption of de-merit goods which
damage social welfare
• The huge increase in household and industrial waste.
These externalities reduce social welfare and can
lead to market failure.
 GROWTH AND THE ENVIRONMENT: THE
SUSTAINABILITY OF ECONOMIC GROWTH

Growth may lead to a rapid destruction of rain forests, the

over-exploitation of fish stocks and loss of natural habitat
created through the construction of new roads, hotels, retail
malls and industrial estates. Some of the main
environmental threats include:
• The depletion of the global resource base and the impact
of global warming.
• A huge expansion of waste and pollution arising from both
production and consumption
• Species extinction leading to a loss of bio-diversity
ECONOMIC GROWTH AND INCOME
AND WEALTH INEQUALITY
Not all of the benefits of growth are evenly
distributed. A rise in real GDP can often
be accompanied by widening income
and wealth inequality in society that is
reflected in an increase in relative
poverty.