Difference between Economic Growth and Economic Development

Even though the terms economic growth and economic development sound similar, there is a massive difference between the two. Here's what these two mean and why students need to differentiate between the two.

Economic Growth 

It is a constricted concept as compared to economic development and its quantities. It is the measure of the increase in the goods and services produced in a country (per head of the entire population) for a specified period. 

Therefore, this quantitative term displays the growth in the market value of a product or goods in a particular region. This is usually measured in terms of GNP (gross national product) and GDP (gross domestic product). 

Choose Correct Answer 

Q1. Choose the appropriate option/(s) that explain economic growth. 

  1. Increase in per capita real income 

  2. Structural change in the economy 

  3. Increase in per capita production

  4. All of above 

Answer: d 

Economic Development 

Economic development is a qualitative concept and is the process which helps improve the overall progress of a nation. A country's overall health, standard of living, literacy status, per capita income, improvement needs, technological advancement, etc. are responsible for determining its economic development. 

Therefore, a country with improved overall health and academics for the entire population is likely to have better economic development than others which lacks these factors. The technological advancements also contribute to industrial development contributing to the overall development of the country. 

To put simply, the quality of living of the entire population is what this economic development refers to. 

Choose Correct Answer 

Q2. Choose an appropriate option by which economic development is characterised. 

  1. Change in the occupational structure 

  2. Structural change in the economy 

  3. Both a and b 

  4. None of the above 

Answer: c 

Difference between Economic Growth and Economic Development 

While both economic growth and economic development are crucial determinants for a country's economic condition, there are specific differences between the two. Going through these differences will help students differentiate between them. 

  1. Meaning 

One of the significant differences between economic growth and economic development is in terms of its definition. Economic growth is the measure of growth in the production of goods and commodities for the entire population in a financial year and is represented as a quantity. 

Economic development talks about the overall growth of the nation in terms of health improvement of the citizens, academic level progress, per capita income, technological advancements, etc. 

  1. Span 

Economic development is a much broader concept when compared to economic growth. Besides, economic growth can be treated as a small part of economic development.  

  1. Scope 

The scope of economic growth is unidirectional as it only refers to the economic growth of the nation. It only refers to the growth in the market value of goods and commodities produced in the country. 

Economic development in this aspect has a greater scope as they are multi-dimensional, and they take into account both quality and quantity. The quality of living of a nation's citizens and their overall development forms the basis of this. 

  1. Term 

Economic development is considered a long term process, whereas economic growth is considered a short term process. 

  1. Measurement 

Economic growth is a quantitative approach and is measured in terms of GNP (gross national product) and GDP (gross domestic product). Economic development can be both quantitative and qualitative and are determined by taking literacy rate, HDI (Human development index), gender-related index, infant mortality, human poverty index, etc. into account. 

  1. Related to 

Economic development applies to underdeveloped and developing countries, whereas the concept of economic growth is more applicable to developed countries. Underdeveloped or developing countries are assessed continuously for the literacy rate, gender-related index, HDI, etc. 

  1. Effect 

With economic growth, one can expect quantitative development in the economy with indicators like per capita income, GNP, GDP, etc. But, economic development can have both quantitative and qualitative growth in the economy as it improves with the improvement in life expectancy rate, literacy rate, reduced poverty rate, mortality rate, etc. 

  1. Government Support 

Difference between economic growth and development in terms of government support can be that economic growth does not necessarily require intervention from the government as it is an automatic process. But, economic development is profoundly affected by the government made policies for development in various sectors. 

  1. Process Tenor 

To distinguish between economic growth and economic development, economic growth is determined for a particular period, usually for a financial year. But, economic development is a continuous process. 

Multiple Choice Questions 

Q1. Scarcity of Capital, Unemployment, and Technological Backwardness is Found in Countries that are- 

  1. Developed 

  2. Underdeveloped 

  3. Both 

  4. None of the above 

Answer: b 

Q2. Which are the Characteristics of an Underdeveloped Economy?

  1. Low level of capital productivity 

  2. High level of inequality  

  3. A relatively closed economy 

  4. All of above 

Answer: d 

Q3. What is/are the Component(s) of HDI?

  1. Infant mortality rate 

  2. Life expectancy Index 

  3. Population growth rate 

  4. All of above 

Answer: b 

Q4. An Underdeveloped Country can be Characterised by Which of the Following Options?

  1. Large proportion of labour force in the tertiary sector 

  2. High per capita real income 

  3. State of deprivation of a large proportion of the population

  4. All of the above 

Answer: c 

With such definitions and concepts, students will be able to understand the topic well and write pointers of economic growth vs. economic development. They can further go through a more thorough explanation by visiting Vedantu's website and improve their learning.

FAQ (Frequently Asked Questions)

1. What is Economic Growth?

Economic growth is the measure of a country's economic improvement in the production of goods in a period (represented in quantitative terms). 

2. What is Economic Development?

Economic development refers to the overall development of a country and its quality of living. It can be both quantitative and qualitative and is a continuous process. 

3. What is the difference between Growth and Development?

While growth is a quantitative approach, development can be both quantitative and qualitative. Economic growth is determined for a specific period and development is a continuous process.