Economic growth is an increase in the capacity of an economy to produce goods and services,

compared from one period of time to another. It can be measured in nominal or real terms, the
latter of which is adjusted for inflation. Traditionally, aggregate economic growth is measured in
terms of gross national Product (GNP) or gross domestic product (GDP), although alternative
metrics are sometimes used.
Economic Development is the process focusing on both qualitative and quantitative growth of
the economy. It measures all the aspects which include people in a country become wealthier,
healthier, better educated, and have greater access to good quality housing. Economic
Development can create more opportunities in the sectors of education, healthcare, employment
and the conservation of the environment. It indicates an increase in the per capita income of
every citizen. The standard of living includes various things like safe drinking water, improve
sanitation systems, medical facilities, the spread of primary education to improve literacy rate,
eradication of poverty, balanced transport networks, increase in employment opportunities etc.
Quality of living standard is the major indicator of economic development. Therefore, an
increase in economic development is more necessary for an economy to achieve the status of a
Developed Nation.

Difference between economic growth and development

Economic Growth Economic development

High Production High Production + Social Welfare
Quantitative concepts Qualitative concepts
Unidimensional concept Multidimensional concept
Long-term process Short-term process
It is just a mean It is end in itself
More related to the developed countries More related to the developing countries
Indicators: Real GDP, Real Per Capita Income Indicators: HDI, PQLI, Per Capita Income etc.
Quantitative impact on economy Qualitative impact on economy

Characteristics and Institutions of Developing Countries

Higher Levels of Inequality and Absolute Poverty

Lower Levels of Living and Productivity
An Extended Family
Peasant Agricultural Societies
A High Proportion of the Labor Force in Agriculture
A High Proportion of Output in Agriculture
Inadequate Technology and Capital
Low Saving Rates
A Dual Economy
Varying Dependence on International Trade
Rapid Population Growth
Low Literacy and School Enrollment Rates
An Unskilled Labor Force
Lower Levels of Human Capital
Lower Levels of Industrialization and Manufactured Exports
Poorly Developed Economic and Political Institutions

 Low political institutionalization Institutions

 Varying political systems
 A small political elite
 Experience of western domination
 Insufficient state tax collections and provision of basic services
 Lack of transparency
 Poor governance: democratic and authoritarian regimes
 Rent seeking
 Insecure property rights