Economic Growth and Development UPSC: Definition, Factors, and Dissimilarities

By Aarna Tiwari|Updated : January 12th, 2023

Though the terms Economic Growth and Development may seem quite similar, they are not. Economic Growth refers to quantitative increases, such as a nation's monetary growth, whereas Economic Development is both a quantitative and qualitative concept. Economic Growth and Development are equally important for the gradual improvement of a country. This progress leads to higher average income and lowers a country's unemployment rate.

The topic of Growth and Development is very important from the UPSC Exam point of view. Both UPSC Prelims and UPSC Mains cover the topic well in detail. The article covers all the essential aspects of the topic, such as the definition, factors, similarities and differences. 

Table of Content

Economic Growth and Development

Economic growth is alluded to as the increment seen in the money-related worth of the multitude of labour and products delivered to the economy during a period. This quantitative measure mirrors the possible expansion in the number of deals occurring in the economy.

The nature of economic growth is single-dimensional compared to economic development because the main focus of economic growth is the income of the individuals. Economic growth earlier used to be measured in terms of GDP (Gross Domestic Product). GDP, Gross National Income (GNI), and Per Capita Income estimate economic growth.

☛ Check: Difference Between Economic Growth and Economic Development

Development alludes to the process by which the general well-being, prosperity, and academic level of the people of a country move along. It also alludes to the better production volume because of the headways of innovation. As previously mentioned, Development is a qualitative measure of the life of the people of a nation which is determined using the Human Development Index (HDI).

The nature of economic development is multi-dimensional, unlike economic growth, because it focuses on both income and improving the living standards of the citizens of a country.

Factors of Economic Growth

The factors of 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 the planned usage of natural resources, the productivity of an economy increases.
  • The 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 increases with technological advancement.

Factors of Economic Development

Factors of Development which have a positive impact 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 Development.
  • Improvement in literacy rate has a positive effect on Economic Development. There should also be an improvement in technical knowledge for 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 boosts. As a result, capital formation boosts the Process of Development.

Determinants of Growth and Development

The determinants of Growth and Development are discussed below:

  • Natural Resources: The quality and quantity of natural resources play a vital role in deciding the economic development of any country.
  • Capital Formation: It is the core of economic development; without capital accumulation, economic growth cannot be accelerated.
  • Foreign Capital: In the early stages of development, every developed country obtained foreign assistance. The foreign capital does not come in the form of aid alone but also in direct in­vestment (FDI).
  • Population Growth: Growing population increases output by increasing the working population or labour force, provided all are absorbed in productive employment.
  • Education & Health: Both education and health are crucial factors in economic development.
  • Technological Progress: The use of advanced techniques in production or progress in technology brings about a significant increase in per capita output

Dissimilarities Between Economic Growth and Development

The dissimilarities between Economic Growth and Development are given below:

Economic Growth

Economic Development

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.

Growth and Development UPSC

Growth and Development are related to the UPSC Syllabus's economy section. In the UPSC Exam, questions are asked on this topic at both stages, i.e., UPSC Prelims and UPSC Mains. To understand the topic and have a firm foundation, one can start with the NCERT Books for UPSC and then proceed with the recommended Economics Books for UPSC.

Economic Growth and Development UPSC Questions

One can also refer to the UPSC Previous Year Question Papers to get an idea about the UPSC Exam Pattern.

Question: Economic growth is usually coupled with 

  1. Deflation
  2. Inflation
  3. Stagflation
  4. Hyperinflation

Answer: Option B

Question: Economic growth in country X will necessarily have to occur if 

  1. there is technical progress in the world economy
  2. there is population growth in X
  3. there is capital formation in X
  4. the volume of trade grows in the world economy

Answer: Option C

Question: Consider the following specific stages of demographic transition associated with economic development : 

  1. Low birthrate with low death rate
  2. High birthrate with high death rate
  3. High birthrate with low death rate

Select the correct order of the above stages using the codes given below :

  1. 1, 2, 3
  2. 2, 1, 3
  3. 2, 3, 1
  4. 3, 2, 1

Answer: Option C

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Economic Growth and Development FAQs

  • Economic Growth and Development have a positive impact on each other. Economic growth primarily emphasizes GDP and total output and assesses the formal economy in extremely quantitative terms and observable outcomes. Whereas, Economic development strongly emphasizes qualitative developments to produce quantitative outcomes.

  • With respect to government intervention, Economic Growth and Economic Development different as economic growth doesn't necessarily require government intervention as it is an automatic process. Whereas, economic development requires government intervention because the government forms all the developmental policies of a nation.

  • GDP, Consumer Price Index (CPI), Monthly Unemployment report, and per capita income of the nation can be indicators of Economic Growth. These are some of the indicators that are used to represent Economic Growth in India.

  • HDI (Human Development Index), quality of life, and NEW (Net Economic Welfare) are some indicators of Economic Development. Other than this, one can consider per capita income, poverty, and social health Indicators as some of the indicators adopted for calculating Economic Development

  • Increases in real national income and real per capita income are indicators of economic growth. Economic development is described as a consistent increase in society's material well-being.

  • Having more money will help with the challenges associated with Economic Growth and Development. More money gives businesses the means to raise finance, advance technologies, develop, and grow. All of these activities boost productivity, which boosts economic growth. Tax reductions and refunds, according to supporters, allow consumers to boost the economy by spending more money.

  • The 5 major factors of Economic Growth and Development are:

    • Technology.
    • Human Resources
    • Infrastructure.
    • Natural Resources.
    • Deregulation.
  • The indicators of Economic Growth and Development are:

    • The Human Development Index (HDI)
    • Gross Domestic Product (GDP)
    • Gross National Product (GNP)
    • Infant mortality rate
    • Literacy rate
    • Life expectancy
    • GNP per capita
    • Birth and death rates

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