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Development and Growth

Concept of Development and Growth
A rubbish heap can grow but it does not develop. – R. L. Ackoff

Growth
A tree can grow. That means that it adds to its height. We can count the inches it has grown. An
organization can grow, adding people or other groups to itself. These are counted very easily. Profit
can grow, adding money in different ways.

Economic growth 
Economic growth is typically just a number, often GDP (gross domestic product), but it is often the
only thing that is publicized as a measure of success. Economic Growth can be measured by an
increase in a country's GDP. GDP is a measure of the national income / national output and national
expenditure. It basically measures the total volume of goods and services produced in an economy.
Consequently, as economist Amartya Sen points out, "economic growth is one aspect of the process
of economic development."

Development
Development encompasses many things but it is shown by the qualitative improvement of
circumstances. This means that as something develops the quality of the whole improves. As a tree
develops, it will not only grow, but also be able to reproduce, bear fruit, be healthy and continue
growing. If an economic situation develops, not only can profits increase, but, for corporations, the
workers conditions are improved, difficulties in operations get resolved, individual employees can be
trained beyond their current station, which in turn helps the company. Economic development in a
community or country leads to better overall living standards and opportunities to improve.

Though growth and development may affect each other, they are not dependent on each other.
Growth may happen despite any development. Development can happen but there may actually be
little growth. Ideally, of course, both will be evident. Sometimes, if something is not growing, it
needs to develop to get to that growth. If something cannot develop, there may need to be growth in a
certain area, like income, before anything can be done to improve the overall situation. And if either
one is absent, growth without development or development without growth, then whatever it is in
danger.

Economic development 
Economic Growth is a narrower concept than economic development. It is an increase in a
country's real level of national output which can be caused by an increase in the quality of
resources & improvements in technology or in another way an increase in the value of goods and
services produced by every sector of the economy.
 Quantitative and qualitative changes in the economy.
 Increase in economy's real national income as well as per capita.
 Development of agriculture, industry, trade, transport, means of irrigation, power resource,
critical infrastructure, regional competitiveness etc. 
 Improvement in self-esteem needs, freedom from oppression, greater choice education,
increased consumption and spending.
 Levels of environmental standards
 Development of human capital, sustainable growth, social inclusion, safety, crime prevention.
 Reduce of poverty and unemployment.
 Improvement in housing, electricity, internet, living standards.
 Quality education, literacy, healthcare, morbidity, nourishment, safe drinking water.
 Life expectancy.
Growth Vs Development
 Growth and development both pertain to a positive change or increase. The former is purely
quantitative, while the latter is mostly qualitative.
 Growth is just ‘getting bigger’, whereas development is improvement.
 Growth is a process of becoming larger or longer or more numerous or more important, mostly
a physical change; development is a process in which something transform (mostly positive)
into a different stage or improves, it may be physical, social or psychological.
 Growth describes the process of growing. Development may mean a kind of improvement in
the condition of health.
 In economy, growth relates to the real output, GDP for instance. Development pertains to
improved standards of living, more employment opportunities, better saving capacity.
 In enterprises, to grow is practically to increase earnings, while to develop is to improve the
corporate environment through pro-employee programs, social welfare initiatives, eco-friendly
processes etc.
 Growth is termed as a physical change, where as development is said to be physical as well as
social or psychological change.
 When the term growth is related to living beings, it can mean the increase in weight, height
and bone seize. On the other hand, development is the process of developing skills and
capacities. It deals with the behavioral aspect of a living being.

Comparison chart
Economic Development Economic Growth

Implications Economic development implies an upward Economic growth refers to an

movement of the entire social system in terms increase over time in a country`s
of income, savings and investment along with real output of goods and services
progressive changes in socioeconomic (GNP) or real output per capita
structure of country. income.

Factors Development relates to growth of human Growth relates to a gradual

capital indexes, a decrease in inequality increase in one of the components
figures, and structural changes that improve of Gross Domestic Product:
the general population's quality of life. consumption, government
spending, investment, net exports.

Measurement Qualitative.HDI (Human Development Index), Quantitative. Increases in real

gender- related index (GDI), Human poverty GDP.
index (HPI), infant mortality, literacy rate etc.

Effect Brings qualitative and quantitative changes in Brings quantitative changes in the

the economy economy

Economic growth without development (MEP2C2)

It is possible to have economic growth without development. ie. an increase in GDP, but most people
don’t see any actual improvements in living standards.
 Military spending.
 Environmental problems.
 Private surplus value.
 Production not consumed.
 Corruption. A country may see higher GDP, but the benefits goes to politicians.
 Congestion. Traffic jams.
Equity Vs Growth
First, are growth and poverty in conflict? This seems absurd. It is difficult to argue that high growth
of GDP has no impact on bringing at least some people above the poverty line. It is even more
difficult to argue that, say, a 15% growth rate of GDP, will not automatically reduce poverty more
than a 10% rate. After all, it is clear that with a 15% growth, government measures to redistribute
income will meet with less political resistance.
o Equality denotes that everyone is at the same level, whereas equity denotes the more
opportunity to weak one.
o Equity refers to the qualities of justness, fairness, impartiality and even handedness,
while equality is about equal sharing and exact division.
o Equality equals quantity, whereas equity equals quality.

Determinants of Development
Economic development ideally refers to the sustained, concerted actions of communities and
policymakers that improve the standard of living and economic health of a specific locality. The
definition of economic development given by Professor Michael Todaro is an increase in living
conditions, improvement of the citizens self-esteem needs and free and a just society. He suggests
that the most accurate method of measuring economic development is the Human Development
Index which takes into account the literacy rates & life expectancy which in-turn has an outright
impact on productivity and could lead to Economic Growth. However, economic development can
also be measured by taking into account the GDI (gender related index).

Indicators of Development
There are various types of macroeconomic and socio cultural indicators or "metrics" used
by economists and geographers to assess the relative economic advancement of a given region or
nation. The World Bank's "World Development Indicators" are compiled annually from officially-
recognized international sources and include national, regional and global estimates.
 GDP per capita - Growing development population per capita is gross domestic product
divided by mid-year population.
 Gross National Product (GNP) measures the total economic output of a country, including
earnings from foreign investments.
 Income distribution
 Inflation measures how much the prices of goods, services and wages increase each year.
 Unemployment.
 Human poverty index
 Literacy and education
 Life expectancy
 Health care facility
 Infant mortality rate 
 Gender-related development/ empowerment index
 Social security and pensions
 Modern transportation
 Environment
 Social Cohesion
 Good Governance
 Freedom
 Sustainability
 Conservation
 Decent housing.
Development indicators
Country Development indicators
Vietnam Both countries have a similar per capita GDP. However, life
and expectancy and literacy are considerably higher in Vietnam than they are in Pakistan.
Pakistan
Saudi Arabia Saudi Arabia has a per capita GDP comparable to that of Croatia. However, in Saudi
And Arabia there is greater inequality between men and women when considering access
Croatia to education and political power. So, although they are equal on an economic
development index - Saudi Arabia is less developed on a human development index.

Constraints and Prospects of Economic Development in South Asia with Reference to Nepal
Although neighboring country are achieving double digit of economic growth where as Nepal’s
average economic growth is 4 % over a decade. Nepal is facing political instability, instability in
policy, lack of long term vision, strike, labor problem, shortage of energy, lack of investment
environment etc. Nepal is mainly depend on agriculture but due to the lack of irrigation facility, lack
of proper technology, division of land, brain drain, lack of agricultural material it is not even
achieved any progress in this field.

Large number of youth of Nepal are in abroad are sending huge amount of remittance but is spending
in importing daily commodities. Nepal has high potentiality in hydro power, tourism, and agriculture
but is not properly used.

Nepal is an isolated, agrarian society until the mid-20th century, Nepal entered the modern era in
1951 without schools, hospitals, roads, telecommunications, electric power, industry, or civil service.
The country has however, made progress toward sustainable economic growth since the 1950s and is
committed to a program of economic liberalization.

Nepal has used a series of five-year plans in an attempt to make progress in economic development.
It completed its ninth economic development plan in 2002; its currency has been made convertible,
and 17 state enterprises have been privatized. Foreign aid to Nepal accounts for more than half of the
development budget. Government priorities over the years have been the development of
transportation and communication facilities, agriculture, and industry.

Agriculture remains Nepal's principal economic activity, employing 70% of the population and
providing 37% of GDP. Only about 20% of the total area is cultivable; another 33% is forested; most
of the rest is mountainous. Rice and wheat are the main food crops. The lowland Terai region
produces an agricultural surplus, part of which supplies the food-deficient hill areas.

GDP is heavily dependent on remittances of foreign workers. Subsequently, economic development

in social services and infrastructure in Nepal has not made dramatic progress. A countrywide primary
education system is under development, and Tribhuvan University has several campuses. Although
eradication efforts continue, malaria had been controlled in the fertile but previously uninhabitable
Terai region in the south. Kathmandu is linked to India and nearby hill regions by road and an
expanding highway network.

Major towns are connected to the capital by telephone and domestic air services. The export-oriented
carpet and garment industries have grown rapidly in recent years and together now account for
approximately 70% of merchandise exports.

In the economic policy area, the performance of public enterprises needed improvement. Most of the
country's large-scale firms were in the public sector, and many of these enterprises either were
protected or subsidized, which inhibited their efficiency. Most public enterprises also lacked a sound
financial footing. Foreign indebtedness was also problematic. Compared with many less-developed
countries, Nepal's foreign debts were not very high. However, these debts were increasing.

Labor productivity needed to increase to improve the well-being of the people. Nepal suffered,
however, from technology deficits, as well as from shortfalls in its literacy rate, basic science
education, and technical training. Although there had been some progress in raising the literacy rate,
properly trained technicians remained in short supply.

In a country where 90 percent of the population was largely dependent on agriculture, few families
had landholdings exceeding four hectares, largely because of the shortage of land.

The need for greater agricultural and labor productivity, as well as employment opportunities, to
offset the demands of a growing populace was paramount. Of primary importance, however, were
increased efforts at controlling population growth.

Chronic problem of SAARC

 Mass poverty
 Law rare of economic growth
 Low level of human development
 Over population and unemployment
 Imbalance and fluctuation of financial and capital market
 Terrorism