What is the difference between economic growth and economic development? comparison table

The concepts of "economic growth" and "economic development" are quite close in meaning, but not at all identical in nature. What do these terms mean? What is the difference between economic growth and economic development?

The essence of economic development

Economic development is a long process that is characterized by a wide range of factors that cover not only the economy of the state itself, but also the social sphere and other areas. The term is applicable to states with developing economies (the difference between economic growth and economic development is that the first term describes changes in advanced economies).

Economic development is manifested in the overall improvement of the welfare of the state, involves the growth of real incomes of citizens, raising the level in many social indicators: the quality of education, cultural development. Other important points of economic development are the attractiveness of the state in terms of investment, a stable exchange rate (or appreciation of the national currency).

Index of dynamism of economic development

According to a study by the international audit company Grant Thornton and the authoritative Economic Research Center of The Economist Intelligence Unit, Australia, whose score is sixty-six points, topped the economic development dynamic. The top three also included Chile and China. The rating score is determined by the expert assessment of the state's economy by twenty-two indicators, which are combined into several control groups.

Country groups by level of economic development

By the level of general economic development, several groups of states are singled out:

• Developed countries, which can be considered countries with innovative economies and a high standard of living. They are Japan, USA, Germany, Australia, Finland and many others. The states of this group are characterized by high-quality human capital, leadership positions in science, technology, medicine, education and other industries, and high quality of life for citizens.

• Developing countries, which set as their main goal to catch up with developed by the level of economy and quality of life of citizens. These countries include China, Chile, Mexico, Pakistan, Latvia, the Czech Republic, Croatia, Kazakhstan and others.
• Underdeveloped countries that are in decline. This is the majority of African countries, island states, as well as Mongolia, Afghanistan, Yemen, Bangladesh and the like.

Economic growth: the concept of

How does economic growth differ from economic development? Growth in the economy is a concept with a narrower concept. It is a short-term process and is characterized by a change in the volume of production in a positive direction. The more economic growth is different from economic development, it is a manifestation: the term "growth" in the economy can be expressed in terms of "gross domestic product" and "gross national product", while economic development is linked, among other things, to the living standard or social sphere.

The rates of economic growth are distinguished by such types of phenomena:

• Uniform, which is observed in the European Union or the United States.
• The so-called economic miracle, which characterizes the economies of South Korea, Hong Kong or Japan.
• The tragedy of growth is the decline of the economy, accompanied by a decline in the standard of living of the population. The situation is typical for Central African countries.
• Absence of growth that does not affect the social sphere. Such a process is observed in Zimbabwe.

Factors affecting the growth of the economy

Among the factors that affect the growth of the economy in developing countries, you can list the following:

• Level of development of transport and other infrastructure (economy, communications);
• Transition from agriculture to productive production (labor mobility);
• Inflow of financial assistance and investments from other states;
• Educational standards and the level of literacy, which can be defined as the further productivity of the workforce;
• The amount of available savings;
• Level of corruption.

comparison table

What is the difference between economic growth and economic development? The main differences are clearly reflected in the table below.

The common thing between these concepts is that economic growth is among the possible components that make up economic development, but it is not always its consequence or determines economic development in the short term.

What is the difference between economic growth and economic development? The essential difference between such concepts is most clearly understood by the example. So, the growth of a person means an increase in body weight and growth, that is, those indicators that can be measured, compared, analyzed. Development is determined by a number of not only physical factors (age, height and body weight), but also abstract aspects - culture, behavior, maturity level, communication skills, intelligence, habits.

Economic growth without development

Economic growth without development occurs when, with an increase in quantitative indicators, there is no real growth in the standard of living of the population. This situation can be the result of such reasons:

• A high level of corruption, when all the improvements in the form of additional funding go to the top manager.
• Ecological problems. Removing measures to ensure environmental safety will almost certainly increase production, but the same step will provoke a deterioration in public health. So, along with economic growth, the quality of life of citizens of the state will fall.
• Congestion of transport infrastructure. Collapse on the roads, which may be the result of a jump in economic growth, will worsen the quality of life of the population, which will have to spend considerable time in traffic jams.

• Financing of the military sector. The country can increase its GDP by developing the defense industry, while in other areas (education, healthcare, culture) there will be no progress.
• Lack of sales markets. The increase in output, expressed in quantitative terms, will lead to economic growth, but in the absence of sales markets, there will be no real improvement in the standard of living of citizens.

A Brief Explanation of Differences

Briefly (but this is no less complete) explained the difference in the concepts of Schumper. How does economic growth differ from economic development? The author gives an accessible answer: growth is a change in the quantitative plan (increase in production and consumption), and development - qualitative characteristics (improving living standards of the population, innovations in production, foreign investment, etc.).

So, how does economic growth differ from economic development? Development should be understood as a broad concept, which includes economic growth. It can be evaluated by a number of different indicators that indicate progress in the economy of the state as a whole. Growth is only characterized by specific indicators in numerical terms.