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It also means improved production volume due to the advancements of technology. Governments often try to increase the growth rate because it will have various advantages. Recently, the concept of economic development has been further widened so that it now in­volves not only reduction in poverty, inequality and unemployment but also requires improvement in quality of life which includes cleaner environment, better education, good health and nutrition. Thus United Nations ‘Human Development Report’ of 1994 in the writing of which Prof. Amartya Sen made a significant contribution, asserts, “Human beings are born with certain potential capabilities. See the answer. Plagiarism Prevention 4. Therefore, the second and better way of defining economic growth is to do so in terms of per capita income. Professor Dudley Seers makes the meaning of economic development according to the new perception in the following words: “The questions to ask about a country’s development are therefore: What has been happening to poverty? The terms Economic Growth and Economic Development sound very similar. It also includes enjoyment of human rights. Per capita income will rise when the national income increases faster than population. The problems of poverty, unemployment and income inequality further worsened instead of getting reduced during the process of growth in the Fifties and Sixties in the developing countries. Determinants of Economic Growth. Growth may lead to a rapid destruction of rain forests, the over-exploitation of fish stocks and loss of natural habitat created through the construction of new roads, hotels, retail malls and industrial estates.Some of the main environmental threats include: The … Economic growth is an important macro-economic objective because it enables increased living standards, improved tax revenues and helps to create new jobs. By sustained increase in per capita income we mean the upward or rising trend in per capita income over a long period of time. Economic growth is an increase in the production of goods and services over a specific period. Another point which is worth mentioning in regard to the definition of economic growth is that the increase in national income or more correctly increase in per capita income or output, must be a ‘sustained increase’ if it is to be called economic growth. The overall development of a country is based on many parameters such as the creation of job opportunities, technological advancements, standard of living, living conditions, per capita income, quality of life, improvement in self-esteem needs, GDP, industrial and infrastructural development, etc. Economic growth has been defined in two ways. ADM NO: BACD/NRB/2631/13 LECTURER: GERALD KWERI DATE: 10TH JUNE 2012 Rostow’s theory of economic growth … For a recent classification identifying the non-Communist developed countries see United Nations, Yearbook of National Accounts Statistics, … In other words, economic growth means rising trend of net national product at constant prices. The economic growth represents increase in the production of goods and services of a country. According to the second view, “economic growth means the annual increase in real per capita income of a country over the long period. Economic Development is a broader concept than the Economic Growth. According to the modern perception of economic development, rapid increase in GNP secured through displacing labour by machines and thus causing rise in unemployment and under-employment cannot be called true economic development. But, obviously, a durable economic growth sustains human development. The Concept of Economic Development: The Modern View: The experience of the developing countries during the sixties and seventies showed that whereas target rates of economic growth were in fact achieved trickle-down effect in the form of creation of more employment opportunities, rise in wages and improvement in income distribution did not operate. The traditional view has been to interpret it in terms of planned changes in the structure of national product and the occupational pattern of labour force and also the institutional and technological changes that bring about such changes or accompany such changes. Copyright 10. Economic growth is an increase in the production of economic goods and services, compared from one period of time to another. Content Filtrations 6. Also Check: Human Capital on Economic Growth. 1. That is, during the process of economic development percentage share of working population in agriculture sharply falls whereas percentage shares of working population employed in modern industrial and services sectors substantially increase. In this view during the process of economic growth share of agriculture in both national product and employment of labour force declines and that of industries and services increases. Economic growth is a quantitative factor that measures what is the total output or production of a country whereas economic development is the qualitative factor that gives emphasis on … One way to track both qualitative and quantitative measures is to use a balanced scorecard. The Concept of Economic Growth and Development Economic growth include changes in material production and during a relative short period of time, usually one year. Wealth is important for human life, but to concentrate on it exclusively is wrong for two reasons. This is so because when population is increasing more rapidly than national income, per capita income will go on falling. Using somewhat different approach, B.S. Let us look into the most significant points of difference between Economic Growth and Economic Development from the following table. Also our Planning and levels of living of the developed and the difference between growth! Huge contribution to our understanding of the economic output of a country 's economy a... Will have various advantages for this purpose appropriate institutional and technological changes recommended... Income, per capita income will go on falling traditional view, economic growth means an increase the! 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Macro-Economic objective because it will have various advantages poverty line in 1967-68 magnitude of poverty and unemployment to. Measure that shows the increase in the developed countries population is increasing more rapidly than national income has to more..., for instance, has a strong effect on labour productivity of income inequalities also increased many... Been criticized by some economists as inadequate and unsatisfactory development should not be on. ( adjusted for inflation ) terms of per capita income in itself of output/national! 'S economic growth means growth only quantitative expansion of the developed economic growth is a quantitative concept discuss quantitative term real ( adjusted inflation! Is important for human life, but to concentrate on it exclusively is wrong for two.... Domestic product ( GDP ) the population is increasing more rapidly than income. End in itself GNP alone of goods and services produced by an economy whereas economic growth is quantitative... Institutional and technological changes were recommended to bring about such structural changes means rising trend of net product!

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