Economic growth and economic development are the factors measuring the growth of an economy. They may sound similar although, economic development is a broader concept than economic growth.
What is Economic Growth?
Economic growth refers to an increase in the value of goods and services produced in a given period in an economy. It is a quantitative approach measuring the increase in the monetary value of goods and services in a given period in comparison to previous periods. The positive change in value should occur from an increase in the production capacity of an economy and not from a mere rise in the prices of goods and services. It measures real output growth in a country.
Gross Domestic Product (GDP) and Gross National Product (GNP) are two widely used concepts that are used to measure the economic growth of a nation.
Gross Domestic Product or GDP is a parameter that measures the market value of all the goods and services produced within the geographical boundaries of a country in a specified period. India’s GDP accounts for Rs.135.13 lakh crore as of FY 21.
Gross National Product or GNP measures the monetary value of goods and services produced by the citizens of the country regardless of the geographical boundaries of a country.
GDP and GNP serve as an indicator of the total amount of production happening in an economy. The higher the value of these growth parameters, the higher will be the economic growth of a nation. Several factors that may hamper the growth of a country consist of gender inequalities, environmental impacts, inflation rates, scarcity of natural resources, interest rates, and skill shortages.
What is Economic Development?
Economic development refers to the qualitative development of a nation concerning its citizens. It takes into account political, social, cultural, and economic growth. It measures human development i.e., growth in the standard of living of people. Factors contributing to the economic development of a country comprise government facilities, quality of life, education standard, employment opportunities, per capita income, technological advancement, and labour reforms.
Economic Development can be calculated by Human Development Index-
Human Development Index or HDI is an index formulated by the United Nations to measure the qualitative development of a country. It takes into account social as well as economic growth.
India is among the top countries with the highest purchasing power. The growth rates of states like Gujarat, Delhi, and Haryana were higher than Bihar, Madhya Pradesh, and Uttar Pradesh. India’s development dates back to the agriculture sector which has now expanded to include the industrial and service sector.
Economic growth and economic development are an indicator of a developing economy. Continuous growth in the economy leads to an increasing national income, overall production, and employment level. Whereas, economic development contributes to the overall development of citizens of the country. Betterment in the skillset of people, employment opportunities, health of citizens, political stability, and infrastructure contributes to a developed economy. India is known to be the fastest-growing economy.