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Economic Growth And Development Essay

820 words - 3 pages

Economic growth is a necessary but not sufficient condition of
economic development.

There is no single definition that encompasses all the aspects of
economic development. The most comprehensive definition perhaps of
economic development is the one given by Todaro:

‘Development is not purely an economic phenomenon but rather a multi –
dimensional process involving reorganization and re orientation of the
entire economic and social system.

Development is a process of improving the quality of all human lives
with three equally important aspects. These are:

1. Raising peoples’ living levels, i.e. incomes and consumption,
levels of food, medical services, education through relevant
growth processes.

2. Creating conditions conducive to the growth of peoples’ self
esteem through the establishment of social, political and economic
systems and institutions which promote human dignity and respect.

3. Increasing peoples’ freedom to choose by enlarging the range of
their choice variables.’

Economic growth may be defined as an increase in a country's ability
to produce goods and services. Economic growth merely refers to an
increase in the real Gross Domestic Product, or GDP per capita over a
period of time.

It is natural to be misled by the idea that economic growth is the key
to economic development and perhaps a condition of development itself,
but development is more than simply increasing economic output i.e.
GDP per capita. It is a wider concept than economic growth. A
country's economy may experience real growth of GDP with no economic
development taking place. Nevertheless, wider more meaningful
indicators of development are often correlated with GDP per capita,
such as The Physical Quality of Life Index, Human Development Index,
Human Poverty Index and the Human Suffering Index, which help us
include the non-monetary factors of development.

Amartya Sen defines economic development in terms of personal freedom,
freedom to choose from a range of options. While economic growth may
lead to an increase in the purchasing power of people, if the country
has a repressed economy, there is lack of choice and hence personal
freedom in restricted. Hence once again growth has taken place without
any development.

While economic growth may result in an improvement in the standard of
living of a relatively small proportion of the population whilst the
majority of the population remains poor. It is how the economic growth
is distributed amongst the population that determines the level of
development.

Taking into consideration the trickle-down theory of economics by
Lewis, if the growth in economy is not sufficient to satisfy the needs
and wants of the upper sections, nothing or very little shall trickle
down to the lower sections in the hierarchy of society. Thus, the gap
between the rich and poor widens and though economic growth has
impacted a certain section of society, this...

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