Understanding the Difference Between Economic Growth and Economic Development

Economic growth and economic development are terms which are put forth when we discuss a country’s progress. Many use these terms interchangeably because both point to economic improvement. But they are not the same. Economic growth looks at the production within an economy, while economic development looks at betterment in the quality of people’s lives.

Between these issues, it is key to see which the country is progressing in. A country may see great economic growth in terms of production of goods and income generated, which in turn looks great in economic reports, but at the same time, large sections of the population may still be in poverty, which in turn breeds health issues, high unemployment and broken infrastructure.

What Is Economic Growth?

Economic growth is seen when a country produces more goods and services over a time, which is also the same as to say that the economy is growing in size.

For instance, a country which produces a greater quantity of food, clothing, cars, computers and other goods as compared to the previous year is seeing growth in its economy. Also, when businesses put out more services and the economic activities see an upsurge, that is the same.

One of the ways we measure economic growth is via Gross Domestic Product, which we know as GDP. What the measure does is look at the total of what is produced in terms of goods and services in a given year. As production value goes up, that is an indicator the economy is, in fact, growing.

Economic growth is a result of business expansion, factory production of greater quantities of goods, farmers producing more, and the introduction of new industries. Also, when companies grow, they may put out job opportunities for more people.

However, we also see that economic growth doesn’t benefit all members of a country’s population. What we have is that a growth in a country’s wealth may not be shared out equally.

What Is Economic Development?

Economic development goes beyond economic growth; it is focused on improving the quality of life for all.

Economic development includes the areas of education, health care, employment, housing, clean water, electricity, transport and access to basic services. Also, it looks at the issue of whether people have better chances to improve their lives.

In, for instance, a case of a country which has its factories producing more output and its government reporting higher revenues, we may see that as economic growth. But at the same time, if many of its children still don’t have access to school, health care in the hospitals is very poor, unemployment is high and many communities do not have access to clean water, that same country may still be facing very large-scale development issues.

Economic development therefore asks a bigger question: Are people’s lives actually getting better?

The Main Difference Between the Two

Economic growth can be seen as the issue of the economy getting larger, which is different from economic development, which is seen as quality of life improvement.

Economic growth is in large part about numbers like production, income and GDP. Economic development includes also social issues in its picture.

For instance, when a country reports a growth in its GDP from one year to the next, that is a sign of economic growth. But to determine if a country is, in fact, developing, we also look at issues like literacy rates, life expectancy, employment rates, poverty levels and access to health care.

Growth may not require large-scale changes in how we live. What we see in development is a transformation of those living conditions.

Why Economic Growth Is Important

Economic development is very much at the fore for any country. A growing economy, in turn, presents more options for business and work. Also, it can increase government revenue, which in turn we see put toward public services.

As companies grow, they tend to take on more employees. As employees earn income, they put that money towards food, housing, education and other needs, which in turn supports other businesses and fuels more economic activity.

Economic growth also provides a base for development of roads, schools, hospitals and other public services.

However, growth has to be managed better. If large benefits go to only a few in the population, economic growth may not reach the vast majority.

Why Economic Development Is Important

Economic growth is a key element which should also go beyond the production of more goods and services. It is to improve people’s quality of life.

A developed economy must provide its citizens with quality education, health care, fair work and safe homes.

Education is a key issue, which is that through it, we see that which at present may be better prepared, which at present may not be, to play a role in the economy. Also, good health care also plays into it for that which is to have people at their best health, which in turn allows them to work and support their families.

Development also puts a dent in poverty and improves access to basic needs.

Can Economic Growth Happen Without Development?

Yes, it can.

A country can grow very economically at the same time that many of its citizens do not better their living standards. This happens when wealth does not flow out to the greater population or when development favors only a few sectors and regions.

For instance, a country may see great revenue from natural resources like oil. That, in turn, may raise the national income and the GDP. However, if that money isn’t put towards better schools, health care, roads, jobs and other services, many people may not see the benefits of that growth.

This shows that which of the countries’ issues of concern GDP can’t put into perspective, we have more to look at.

Can Development Happen Without Growth?

Development is hard to sustain without economic growth. For a country to do well, they need resources which go to building schools, improving hospitals, providing clean water and creating jobs.

This is that which growth and development should do together. Growth of the economy puts forth resources for development, and in turn, development makes growth which is better for social welfare.

A healthy economy should therefore aim for both.

Measuring Economic Development

Economic growth is tracked via many different means. For instance, the Human Development Index, which we use a great deal. It looks at health, education, income.

In other areas, we see which issues a country is dealing with, which in turn plays into its development. This includes the percentage of the population that lives in poverty, access to electricity and clean water, job availability, school enrollment and health care quality.

These and other measures go beyond GDP.

The Nigerian Situation

Growth vs development is a key issue in the case of Nigeria. Nigeria, which has a large economy, produces key resources like crude oil and also a great variety of agricultural products. Also, there are many businesses and industries which operate within the country.

Economic development does not always benefit all members of the community. Some groups still struggle with issues like unemployment, bad roads, which we also see in terms of access to electricity, health care which is in short supply and poverty.

This is to say that economic growth is not a goal in itself. What we see is that growth has to be put in the context of what kind of policies and actions are put in place which better people’s day-to-day lives.

Conclusion

Economic growth and economic development are related, yet they are different. Economic growth is in terms of an increase in production of goods and services and the size of the economy. Economic development is about raising the quality of life for people.

A country requires economic growth, which in turn produces resources, and at the same time, we see that economic development is required for the betterment of what economic activity does to people’s lives.

The true mark of a country’s progress should be more than what its economy produces in terms of money. Also, we should look at issues of education, health care, employment, housing, transport and other basic needs. When the economy grows at the same time living standards go up, that is when a country truly makes and will sustain that progress.