Economics of Growth and Development
When referring to improvements to a country's economy, the terms economic growth and economic development are often used, sometimes interchangeably. While they share many similarities, the two concepts are unique to one another, yet work with one another to improve and economy in many ways. The economics of growth and development work hand in hand with one another.
Economic growth is a defined, measured increase in production or output in a country's economy. Increased percentages in the country's gross domestic product (GDP) help to indicate economic growth. While economic development can indicate growth in output or production, it in fact measures changes in the many factors of production, using algorithms and indexes in order to measure intangible results for economic development. These intangible results include incomes, employment, poverty, literacy, consumption, savings and investment, savings and investments, among others. Economic development often changes the factors by which goods and services are produced or distributed, while economic growth indicates the increased value in the goods and services sold.
Economic development needs to be sustainable in order to be successful. Sustainable economic development is caused by growth that is steady or increasing over long periods of time. Not all instances of growth are necessarily caused by development. Sometimes finding a scarce resource is enough to cause growth one year, but that resource me deeply by the next, which means it was not a sustainable growth for that particular economy.
Economic growth can be caused by the efforts of development, but can also be affected by other factors, such as discovering new natural resources. More often than not, however, some form of economic development will attribute to economic growth, as many aspects of economic development will directly impact production or output of goods and services. A development effort may not necessarily prove successful as a development, but if it increases the GDP from previous time periods, then said development has attributed to growth.
Growth is not necessarily an indicator of development, nor is development necessarily a sole cause of growth. There are many countries which feature high rates of growth or a high GDP, but lack positive findings in factors that influence development. These economies may show growth, but will report poorly on the development side.
Economic development can often be shaped by non-economic factors. Social conditions, environmental or cultural conditions on economy can have drastic impact on economic development. Economic development is often measured over a long term, and by measuring many factors into one. This could make it difficult to measure economic development, and nearly impossible to do so over the short-term. There is no such thing as rapid or immediate development. However, growth can easily be measured from year-to-year or from any time period, as it is simply comparing hard numbers of one GDP to another. Tracking what led to the increase in the GDP will most likely trace back to some form of economic development, giving these two concepts a direct relationship to one another.