Economic Growth and Development
By : Neha Dhyani
Updated : Apr 4, 2022, 13:29
For any economy, the growth in prices of goods/services is considered Economic Growth. The percentage increase in GDP (Gross Domestic Product) helps determine Economic Growth. While calculating Economic Growth, factors that affect the prices of goods and services are also taken into account. For example, inflation distortion is taken into account while calculating the Economic Growth of a country.
Factors Affecting the Economic Growth
The factors affecting the Economic Growth of a nation are as follows:
- The increase in human resources of a nation results in Economic Growth. The more skilled people are, the more goods/services will be produced.
- Enhancements in physical capital result in Economic Growth. Roads, factories, machinery, and other infrastructural developments will increase economic efficiency.
- The sustainable and planned use of natural resources leads to Economic Growth. With planned usage of natural resources, the productivity of an economy increases.
- Population growth of a nation also influences Economic Growth. A greater population will lead to more human resources and Economic Growth.
- Enhancement in technology has a positive effect on Economic Growth. When technology advances, goods and services can be produced quickly. Also, the productivity of labour in a country increased with technological advancement.
Economic Development - Overview
Many people commit the mistake of using Economic Growth and Development interchangeably. Well, there are several differences between Economic Growth and Economic Development. Economic Development is a process under which the quality of life improves. Economic Development can be applied to a nation, state, or any particular region.
The economic well-being of a geographical area is improved according to the pre-set goals. Along with market welfare, Economic Development also focuses on the welfare of the nation and people.
Factors Affecting the Economic Development
Factors that have a positive impact on Economic Development are as follows:
- Infrastructural development improves the quality of life for people in any particular area. For example, better infrastructure for public transportation systems can improve the quality of life. Any infrastructural development adds to Economic Development.
- Improvement in literacy rate has a positive effect on Economic Development. There should also be an improvement in technical knowledge for Economic Development. As more and more people understand the usage of industrial equipment, labour productivity will increase.
- When more capital is formed in a nation, the economy gets a boost. As a result, capital formation boosts the Process of Economic Development.
Knowing the dissimilarities between Economic Growth and Development
The dissimilarities between Economic Growth and Development are given below:
Economic Growth indicates the monetary growth of any particular region.
Economic Development refers to the quality of life in any particular region.
Economic Growth is measured for the short term.
Economic Development is always counted as a long-term process.
Economic Growth is always quantitative as it is related to monetary growth.
Economic Development can be qualitative or quantitative depending on the situation.
Economic Growth is often applicable to developed nations.
Economic Development is a process for developing nations/regions.
One needs to know the dissimilarities between Economic Growth and development for competitive exam preparation. Learn more about Economic Growth/development.
FAQs on Economic Growth and Development
Q.1. Name some indicators of Economic Growth in a nation?
GDP and per capita income of the nation can be indicators of Economic Growth.
Q.2. Name some indicators of Economic Development in a nation?
HDI (Human Development Index), quality of life, and NEW (Net Economic Welfare) are some indicators of Economic Development.
Q.3. What’s the relationship between Economic Growth and Development?
Economic Growth and Development have a positive impact on each other.
Q.4. Is Economic Development a multi-faceted process?
Economic Development is a multi-dimensional process that improves income as well as the quality of life.