Economic Growth and Economic Development

Readers Question: “Economic growth is a necessary but not sufficient precondition for economic development.” – discuss

Economic growth is an increase in Real GDP. It means the national income / national output is increasing.

Economic development implies an increase in economic welfare. Here economic welfare comprises many elements other than just GDP statistics. Economic welfare is concerned with issues such as:

Absolute Poverty. Do people have sufficient resources to maintain healthy diet and basics of life such as shelter? Economic growth may be essential to enable higher incomes for people to be able to buy more food. However, economic growth doesn’t necessarily improve everyone’s living standards. Economic growth could bypass the poorest sections of society because they don’t have the ability to take part.

Education standards. e.g. literacy Rates. Economic growth may enable more money to be spent on education. However, there is no guarantee that the proceeds of growth will be used to improve education standards. There is often a weak correlation between GDP and literacy rates.

Health Care Standards. Environmental Protection. Economic growth can actually harm the environment and people’s living standards. If growth is caused by cutting down trees, it could actually harm economic development in the long term.

Transport / Infrastructure

Conclusion.

This is just an introduction to a vast topic. Economic growth can definitely help economic development e.g. creating more money for

• public services like education / health care
• Improving incomes so people can have better living standards.

However, it depends on the nature of economic growth. are the proceeds of growth used to improve living standards? Does everyone benefit from the higher GDP?

Does GDP measure economic development?

Constraints to economic growth in developing countries

Does Economic growth increase happiness