The concept of «economic growth» and «economic development» is very close but not identical. What do they mean? What distinguishes economic growth from economic development?
The content of the article
- What is economic growth?
- What is economic development?
- The difference between economic growth and economic development
- Comparison table
What is economic growth?
Under economic growth is commonly understood as the increase of economy of the state, which can be observed on the basis of macroeconomic indicators, especially the GDP. When this is taken into account, the real increase of the corresponding index, not nominal — that is, when GDP is calculated taking into account inflation. If GDP is ahead, we recorded economic growth.
Consider the term may mean not only increasing the value produced by enterprises of the state of goods and services, but also increase their output in quantitative terms. In this sense the notion of economic growth should be interpreted more narrowly with respect to a particular sector, such as engineering.
to contents ↑What is economic development?
Under economic development refers to the overall improvement of the economy of the state, which can be expressed, firstly, in economic growth (but this is not always the case — next, we consider why), and secondly, in the qualitative modernization of business processes — from the point of view of applied technologies, productivity, quality and competitiveness of goods and services supplied on the domestic and world market.
Economic development implies the growth of personal incomes — and, as in the case of GDP, in real and not nominal terms: at rates that exceed inflation. The increased availability of money available determines the improvement in many social indicators — such as quality education for residents of the country (for them becomes more affordable paid training in universities and on different courses, including abroad), as well as, for example, increasing the level of knowledge of citizens in the field of national and international culture (man gets the opportunity to travel more, participate in expeditions, to live in other countries).
Important aspects of economic development and investment attractiveness of the national economy, the trading volume in the stock markets of the state. Has a value and dynamics of the exchange rate. When sustainable economic development is stable or reflects the appreciation of the national currency of the state.
to contents ↑the Difference between economic growth and economic development
The main difference between economic growth from economic development is that the second process is more succinct content. Typically, it includes the economic growth. But be sure — it complements the other indicators, not only economic, but also social character.
Can there be economic growth without economic development and Vice versa?
Theoretically, both are possible. In some periods economic development of the state has often taken a scenario where key macroeconomic indicators — such as GDP — are growing steadily, but it weakly affects the qualitative characteristics of the national economy. Enterprises can continue to produce demanded goods, but without improvements in technological processes and improve, as a result, the competitiveness of products.
In turn, economic development is quite possible and without significant economic growth. Even if GDP is not growing or even declining — companies located in the state may nevertheless to upgrade the factory lines to increase productivity, increase staff salaries.
But in the long-term economic development is unlikely without economic growth — and Vice versa. At a certain point a further increase in the GDP of the state is possible only if the qualitative modernization of production and social systems, while introducing new technologies, raising the purchasing power of the population. Similarly, if GDP and the volume of production in a national economy for a long time will not grow, the economy simply does not appear necessary resources for modernization.
Defining the difference between economic growth and economic development reflect findings in a small table.
to content ↑Comparative table
What is common between them?
Economic growth was among the possible components of economic development (but not always predetermine it in the short term or is the result — and Vice versa)
What is the difference between them?
Expressed in quantitative terms — the size of GDP, the volumes produced by state enterprises of products
Is also reflected in qualitative indicators — level of technological production, the quality and competitiveness of goods and services, in social indicators