Economic Growth 

refers to the rise in the value of everything produced in the economy. It

implies the yearly increase in the country’s GDP or GNP, in percentage terms. It alludes to
considerable rise in per-capita national product, over a period, i.e. the growth rate of increase in
total output, must be greater than the population growth rate.

Economic Growth is often contrasted with Economic Development, which is defined as the

increase in the economic wealth of a country or a particular area, for the welfare of its residents.
Here, you should know that economic growth is an essential but not the only condition for
economic development.

The economic trend in a country as a whole, is the major component for its business
environment. An economy whose growth rate is high provides a promising business prospect and
thus builds business confidence. In this article, you will find all the substantial differences
between economic growth and economic development.

Content: Economic Growth Vs Economic Development

1. Comparison Chart
2. Definition
3. Key Differences
4. Example
5. Conclusion
Comparison Chart
BASIS FOR
ECONOMIC GROWTH ECONOMIC DEVELOPMENT
COMPARISON

Meaning Economic Growth is the Economic Development involves rise in

 BASIS FOR
ECONOMIC GROWTH ECONOMIC DEVELOPMENT
COMPARISON

positive change in the real the level of production in an economy

output of the country in a along with the advancement of technology,
particular span of time. improvement in living standards and so on.

Concept Narrow Broad

Scope Increase in the indicators Improvement in life expectancy rate, infant

like GDP, per capita income mortality rate, literacy rate and poverty
etc. rates.

Term Short term process Long term process

Applicable to Developed Economies Developing Economies

How it can be Upward movement in Upward movement in real national income.

measured? national income.

Which kind of Quantitative changes Qualitative and quantitative changes

changes are
expected?

Type of process Automatic Manual

When it arises? In a certain period of time. Continuous process.

Definition of Economic Growth

Economic Growth is defined as the rise in the money value of goods and services produced by
all the sectors of the economy per head during a particular period. It is a quantitative measure
that shows the increase in the number of commercial transactions in an economy.
 Determinants of Economic Growth

Economic growth can be expressed in terms of gross domestic product (GDP) and gross national
product (GNP), that helps in measuring the size of the economy. It lets us compare in absolute
and percentage change, i.e. how much an economy has progressed since last year. It is an
outcome of the increase in the quality and quantity of resources and advancement of technology.
Definition of Economic Development

Economic Development is defined as the process of increase volume of production along with
the improvement in technology, a rise in the level of living, institutional changes, etc. In short, it
is the progress in the socio-economic structure of the economy.

Human Development Index (HDI) is the appropriate tool to gauge the development in the
economy. Based on the development, the HDI statistics rank countries. It considers the overall
development in an economy regarding the standard of living, GDP, living conditions,
technological advancement, improvement in self-esteem needs, the creation of opportunities, per
capita income, infrastructural and industrial development and much more.

Key Differences Between Economic Growth and Economic Development

The fundamental differences between economic growth and development are explained in the
points given below:

1. Economic growth is the positive change in the real output of the country in a particular
span of time economy. Economic Development involves a rise in the level of production
in an economy along with the advancement of technology, improvement in living
standards and so on.
2. Economic growth is one of the features of economic development.
3. Economic growth is an automatic process. Unlike economic development, which is the
outcome of planned and result-oriented activities.
4. Economic growth enables an increase in the indicators like GDP, per capita income, etc.
On the other hand, economic development enables improvement in the life expectancy
rate, infant mortality rate, literacy rate and poverty rates.
5. Economic growth can be measured when there is a positive change in the national
income, whereas economic development can be seen when there is an increase in real
national income.
6. Economic growth is a short-term process which takes into account yearly growth of the
economy. But if we talk about economic development it is a long term process.
7. Economic Growth applies to developed economies to gauge the quality of life, but as it is
an essential condition for the development, it applies to developing countries also. In
contrast to, economic development applies to developing countries to measure progress.
 8. Economic Growth results in quantitative changes, but economic development brings both
quantitative and qualitative changes.
9. Economic growth can be measured in a particular period. As opposed to economic
development is a continuous process so that it can be seen in the long run.

Example

To understand the two terms economic growth and economic development, we will take an
example of a human being. The term growth of human beings simply means the increase in their
height and weight which is purely physical. But if you talk about human development, it will
take into account both the physical and abstract aspects like maturity level, attitudes, habits,
behaviour, feelings, intelligence and so on.

In the like manner, growth of an economy can be measured through the increase in its size in the
current year in comparison to previous years, but economic development includes not only
physical but also non-physical aspects that can only be experienced like improvement in the
lifestyle of the inhabitants, increase in individual income, improvement in technology and
infrastructure, etc.
Conclusion

After the above discussion, we can say that economic development is a much bigger concept
than economic growth. In other words, the economic development includes economic growth. As
the former uses various indicators to judge the progress in an economy as a whole, the latter uses
only specific indicators like gross domestic product, individual income etc.
Relationship between Economic Growth and Economic Development
Economic Growth:
The term economic growth refers to the quantitative aspect of economic progress of a country.
According to Paul Baron, “Economic growth may be defined as an increase over time in per
capita output of material goods.” In other words, growth of gross national output or per capita
output is an indicator of economic growth.
We know human wants are unlimited and they are increasing over time. Man is never satisfied
with what he has. However, our resources are very limited. Therefore, we should try to satisfy
our wants. Hence, we should try to increase the production of goods and services. Thus,
economic growth signifies the growth in the volume of goods and services.

It leads to:
(i) Increase in National Product:
Growth in the money value of goods and services are not sufficient for an economy. It simple
increases the price of goods and services. In fact, growth is considered in physical terms. Thus,
production of different goods and services must be increase in an economy.
(ii) Increase in Per capita output:
Under growth process, not only the total volume of production increases, but simultaneously
total population will also increase. Thus, per capital output will also increase over time to
maintain the same growth rate. It will help to solve the problem of physical output of goods and
services per capita in any economy.
How to attain growth:
Economic growth can be attained from the following methods:-
(a) To raise total output
(b) To check increase in population
(c) To ensure capital formulation
(d) To raise entrepreneurship.
Economic Development:
According to Promit Chowdhury, “Economic development is an increase in real output goods
and services that is sustained over a long period of time, measured in terms of value added.”
According to Meier and Bladwin, “Economic Development is a process whereby an economy’s
real national income increases over a long period of time.”
According to Prof. Todaro, “Economic development is a multi dimensional process involving
major changes in social structures, popular attitudes and national institutions as well as the
acceleration of economic growth, the reduction of inequality and the eradication of absolute
poverty”.
Economic development is a much broder concept than economic growth. In simple sense,
Economic development.
= Economic Growth + Standard of Living.
Hence, standard of living includes various things like safe drinking water, improve sanitation
systems, medical facilities, spread of primary education to improve literacy rate, eradication of
poverty, balanced transport networks, increase in employment opportunities etc. Thus, the
quality of life is the major indicator of economic development. Therefore, increase in economic
development is more necessary for an economy to achieve the status of Developed Nation.

Human Development Index

The Human Development Index (HDI) is a summary measure of average achievement in key
dimensions of human development: a long and healthy life, being knowledgeable and having a
decent standard of living. The HDI is the geometric mean of normalized indices for each of the
three dimensions.

The health dimension is assessed by life expectancy at birth, the education dimension is
measured by mean of years of schooling for adults aged 25 years and more and expected years
of schooling for children of school entering age. The standard of living dimension is measured
by gross national income per capita. The HDI uses the logarithm of income, to reflect the
diminishing importance of income with increasing GNI. The scores for the three HDI dimension
indices are then aggregated into a composite index using geometric mean.

The HDI can be used to question national policy choices, asking how two countries with the
same level of GNI per capita can end up with different human development outcomes. These
contrasts can stimulate debate about government policy priorities.

The HDI simplifies and captures only part of what human development entails. It does not reflect
on inequalities, poverty, human security, empowerment, etc. The HDRO provides other
composite indices as broader proxy on some of the key issues of human development, inequality,
gender disparity and poverty.

A fuller picture of a country's level of human development requires analysis of other indicators
and information presented in the HDR statistical annex.

HDI Dimensions and Indicators

Link: https://hdr.undp.org/data-center/human-development-index#/indicies/HDI