difference between the development anf growth

1. Define and Distinguish between Economic Development
and Economic growth. What are the major features of an
underdeveloped country?
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2. Meaning
• Economic Growth may be defined as rate of expansion over a
short period.
• “Economic Development is a process whereby an economy’s real
national income increases over a long period of time”.
• Three important things:
• Economic Development is a process,
• Real national income increases
• Long period

3. Prof. Goulet Three Core Values of Development
Life Sustenance:
The life-sustaining needs are food, shelter, health and protection. When these are absent
or in critically short supply, a condition of absolute "underdevelopment" exists.
Self-esteem:
A second universal component of good life is self- esteem- a sense of worth and self-
respect- of not being used as a tool by others for their own ends.
Freedom
Arthur Lewis stressed the relationship between economic growth and freedom from
servitude when he concluded that "the advantage of economic growth is not that
wealth increases happiness, but that it increases the range of human choice.
Goulet, D. (1971) The Cruel Choice: A New Concept in the Theory of Development, New York, Athenaeum

4. Economic growth is a single dimensional quantitative concept
which is concerned only with the rate of increase in national
income. It ignores distribution of income and it ignores qualitative
aspects of human life.
Economic Development
Economic development is broader in nature. It not only includes
the quantitative change but also includes certain qualitative
changes in the economy.
Economic development means not just increase in the real per
capita income but also reduction in economic-divide, poverty,
illiteracy and unemployment.
Thus, economic development includes both economic growth as
well as social welfare.

5. Economic development should focus on inclusive growth –
growth that includes all sectors of the economy and all sections
of the society.
The following discussion outlines the basic differences between
Economic Growth and Development:
Economic Growth Economic Development
Single dimension Concept: Economic growth is merely a
quantitative concept. It is concerned with rate of increase in
national income.
Double / Multi dimension Concept: Concept of economic
development is both quantitative and qualitative in nature. It is
concerned with welfare of people (a qualitative aspect) along
with increase in per capita income (a quantitative concept).

6. Growth Ignores Distribution of Income: Distribution of income
is ignored in case of economic growth. In spite of increase in
income, number of poor people may rise if the distribution of
income becomes further unequal.
Development Considers Distribution of Income: In case of
economic development, distribution of income is given due
consideration. Reduction in inequality (of income distribution) is
one of the principal targets of economic development.
Inequality of income and wealth must be reduced.

7. Independent of Structural, Institutional and Technical Changes:
Economic growth may occur independent of any structural,
institutional and technical changes in the economy. Associated
with socio-technological Change:
Economic development is invariably associated with significant
structural, institutional and technical changes in the economy.

8. Measurement of Economic Growth
Economic growth is the rate of change at which an economy is
growing year after year or the percentage change in the Gross
Domestic Product (GDP) of a country year after year.
The economic growth can be actual growth or potential growth.
Potential growth is also sometimes called as targeted growth.
Economic development is a normative concept which takes into
account both qualitative and quantitative aspects. Economic
development is an increase in overall living standards and
quality of life of the people, on this basis, there are several
parameters for measurement of the economic development as
discussed below:

9. Rise in Real National Income
Real national income at constant prices is conventionally a
comprehensive measure of economic growth as well as
development of an economy.
It is estimated by dividing national income at current prices (also
called monetary income) by the index of price level (showing the
percentage change in price level over time).
Generally, the increased real national income means higher
economic development.

10. Structural, Institutional and Technical Changes Development
process must bring about structural, institutional and technical
changes which stimulate the process of growth and social justice.
Differences between Economic Growth and Development
The difference can be summarized in the below points: Economic
growth is a narrow concept (It studies only increase in real per
capita income) while economic development is a broad concept
(it studies increase in real per capita income as well as economic
welfare).

11. criteria Economic Growth Economic Development
Economic Growth refers to growth in
GDP in a country
Economic Development refers to qualitative
improvement in life in addition to imcome
Rise in per capita income in the long run.
It is not concerned with the distribution
of income.
In addition to rise in income development
emphasises the equitable distribution.
Reduction in unemployment and poverty.
Increase in output on regular basis The output growth should be sustainable
and qualitative.
Growth is quantitative and it may take
place even without development. It can
be obtained by using more resources
and raising productivity and sacrifice
from its population
Development is qualitative and includes
human development, poverty alleviation,
women empowerment, gender equality.
It is not possible to have development
without growth
It’s a narrow concept It’s a broad concept
The composition does not matter for
growth
Changes in the composition of output of
goods and services
Human touch is totally absent in growth Human happiness matters in development

12. Real per capita income is often considered as a better
indicator of economic development than the real national
income.
Economic Welfare Economic development of a country can be
viewed better in terms of economic welfare of the people.
Economic welfare means
lower levels of poverty and inequalities,
better health conditions,
high literacy levels and
better standard of life.

13. DEVELOPED, UNDERDEVELOPED AND THE DEVELOPING
ECONOMIES:
DEVELOPING COUNTRIES
•Underdeveloped, ‘Third World’, Poor ,Low income & developing
countries are synonymous nomenclatures used
interchangeably.
•But the used of the word developing countries is preferred
signifying that these countries are capable of making reasonable
economic progress. There is a dynamism in this word.

14. • A developing economy is essentially marching to progress
and prosperity. The word underdeveloped or the poor or
the low income countries is some what a static term and
gives an inferior feeling.
• Meaning of developing countries- Developing Countries are
those countries which have low standard of living and the
level of industrial production is well below their capacity
which may be achieved with some financial and technical
assistance.

15. CHARACTERISTICS OR SALIENT FEATURES OF UNDERDEVEOPED
COUNTRIES
• Low Income:
•For the current 2017 fiscal year, low-income economies are defined as
those with a GNI per capita, calculated using the World Bank Atlas
Method of $1,025 or less in 2015;
•lower middle-income economies are those with a GNI per capita
between $1,026 and $4,035;
•upper middle-income economies are those with a GNI per capita
between $4,036 and $12,475;
•high-income economies are those with a GNI per capita of $12,476 or
more.

16. • Low Levels of Living Since, about 3/4th of world’s population
lives in underdeveloped countries which have less than one-fifth
share in world income. It is obvious that a vast majority of people
in these countries that must be living under conditions of poverty,
malnutrition, disease, illiteracy, etc. even basic necessities of life
are not available to them.
• Income inequalities- Apart from wide gap between income levels
in advanced and underdeveloped economies there also exists grave
income inequalities between the rich and poor people within the
underdeveloped countries.

17.  Widespread Poverty
 Low Levels of Productivity
 High Rates of Population Growth
 Low Rates of Capital Formation
 Technological Backwardness
 Predominance of Agriculture in the Economy
 Export of Primary Products
 High levels of Unemployment and Underemployment
 Weak Infrastructure
 Low Social Indicators of Development
 Dependence and Vulnerability in International Relations
 Poor Quality of Human Capital

18. CAUSES OF UNDERDEVELOPMENT
Scarcity of Natural Resources
Shortage of Capital
Technological Backwardness
Colonialism
Other Factors

19. Thanks