Differentiate economic growth and economic development?



Answer:
Economic growth is an increase in the amount of goods and services consumed. Economic development is a change in the mix of goods and services produced, as well as in the mix of industries that produce them, with new goods, services, and industries appearing and some of the old ones fading away.

Joseph Schumpeter used to say, "put together as many mail coaches as you like, you will never get a railroad thereby". Growth is more mail coaches; development is a gradual displacement of mail coaches by railroads...
Economis growth is when the economy of a country is showing a year on year growth, ie the monetary standing of the country betters with passing years.

Economis development is when a country is poor, but there is a strategic plan in place to improve over time,
Think of growth as the amount of stuff being used, and development as how well it is being used.
Economic Growth simply means that the GDP (the value of all goods abnd services produced in a country and which is equal to the value of the income of everyone in the country) goes up.

Economic development, on top of growth, takes into account what happens to the growth. Does is simply make its way into swiss bank accounts (no development) or does it help the lives of people. A common indicator for development is the Human Development Index of the UN which takes into account stuff like life expectancy, literacy. http://en.wikipedia.org/wiki/human_devel...

For many years, growth an development were seen as meaning the same thing. If everyone has more money, then everyone is better off and can afford better health care, schools...

One reason was the tacit assumption of the 'trickle-down-effect'.That is, even if all the income generated by the growth went to the richest people in the economy, they would spend at least some of it locally and benefit the poorer people, hence the income would trickle-down, achieving development across the board.

Another was the more realistic picture that if the size of the pie grows (economic growth), then the rich, as well as the poor get more. Now income distribution issues could make the share of the rich grow faster, but as long as the poor got more after growth than they got before (even if the share fell), then the poor were better off than before. Even if, the gap between the rich and poor increased.

Then the question boils down to the distribution of that income. A recent study found that they top2% of the world richest adults owned 40% of the world's wealth.
http://news.bbc.co.uk/2/hi/business/6211...

So it actually begs the question whether that type of unequal growth is indeed development, whether the people at the bottom have opportunities which will allow them or their children to improve their lives drastically rather than be stuck at the same rung of the ladder. It's like there are no rungs between the area where the poor are, and that where the rich are. True the poor get a bit more bread over time, but they see the ladder growing and the gap between themselves and the sumptious buffet table with free flowing champagne increasing.

I think growth and development are not the same, and that unless specific steps are taken to ensure development results from growth, the apitalist system will continue increasing the gap between the rich and poor. If you think of trees, the rich grow and develop into huge trees, but the poor, while they still grow are like bonsai, pruned and kept small.

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