Economic growth is generally defined as the process whereby real per capita income of a country increases over a long period of time. Economic growth has been defined in terms of national income aggregate. Everybody agrees that a necessary requirement of economic growth is an increased output of goods and services. Output is conveniently measured in terms of national income. It is with this idea that economic growth is defined in terms of national aggregates.
Unlike, economic growth, it is difficult to give a precise definition of economic development. Economic development is multi-dimensional in nature. Economists have defined economic development differently, depending upon which aspect of economic development they want to emphasize – output, distribution of income, standard of living, etc.
Economic development is the process whereby the real per capita income of a country increases over a long period of time, along with reduction of poverty, inequality and unemployment. It includes increase in income, reduction in economic inequality, improvement in material welfare, eradication of poverty, reduction of unemployment along with elimination of illiteracy, disease and early death.
Difference Between Economic Growth and Economic Development
The distinction between economic growth and economic development can be made on the following bases:
(i) Economic growth is a narrow concept, while economic development is a more comprehensive term. Economic development denotes growth plus change.
(ii) Economic growth refers to more output, resulting from use of more inputs and greater efficiency of inputs. Economic development goes beyond this to include composition of output, allocation of resources to different sectors of the economy like agriculture, industry, and bringing about structural changes.
(iii) Economic growth involves a rise in income. Economic development, on the other hand, involves not only rise in income, but also reduction of poverty, inequality of income and unemployment. .
(iv) Economic growth is defined strictly in terms of economic indicator, i.e., income. Economic development involves not only economic indicators, but also non-economic indicators like literacy, health services, etc.
(v) Economic growth is entirely a quantitative concept. Economic development involves not only quantitative, but many qualitative changes as well.
(vi) Economic growth is easier to realize. It is possible to increase output and income by using larger quantity of inputs and increasing their efficiency. The process of economic development is far more extensive. It involves a whole lot of changes in the society- changes in the social structure, attitudes, institutions as well as acceleration of economic growth, eradication of poverty and reduction of income inequalities. Therefore, attainment of economic development is a more difficult task.
(vii) Economic growth relates to the problems faced by the developed countries, while economic development relates to the problems faced by the present day developing countries.
(viii) Economic growth differs from economic development in terms of degree of involvement and intervention by the government. Economic growth does not require much of government intervention. However, economic development demands active involvement of the government. The government in the developing countries are expected to assume an active responsibility for promoting economic development.
