Economic Growth and

Economic Development
Subhalaxmi Mohapatra
October 12, 2009
 Coverage of the
Presentation
Growth Versus Development
Economic growth
Meaning
Indicators
Development
Meaning
Indicators
Benefits of economic growth
Costs of economic growth
 Growth Versus
Development
Economic Growth:
A measure of the value of
output of goods and services
over a period of time
Economic Development:
A measure of the welfare of
humans in a society
Economic growth may be
one aspect of economic
development but is not the
same
Economic Growth
Economic growth measures
the level of income of a
country – but it does not take
into account the income
distribution.
Small section of the
population can own a large
proportion of the wealth in
the country. The level of
human welfare for the
majority could therefore be
limited.
 Indicators of Economic
GDP Growth
The value of final goods and services produced
within a country during a given period.
GNP
The value of final goods and services produced
within a country plus the net factor income from
abroad.
GDP Per Capita or GNP per Capita
Takes into account the size of the population
Real GDP / GNP
Takes into account the adjustments for price
changes and inflation.
Economic Development
Development incorporates the notion of
a measure or measures of human
welfare.
It is a normative concept – open to
interpretation and subjectivity
 Human Development
Index
A socio-economic measure
Developed by the United Nations Development
Program (UNDP) to analyze systematically and
comprehensively the comparative status of
socioeconomic development in different
countries.
Focuses on three dimension of human welfare:
Longevity – life expectancy
Knowledge – access to education, literacy rates
Standard of living – GDP per capita, purchasing
power parity
Measure of Human welfare
Poverty
Levels of poverty
Absolute
Relative
Inequality
Sustainable development
Proportion of activity in different
sectors of the economy
Primary
Secondary
Tertiary
 Other Measures
Number of doctors per head
Disease indicators
Economic activity per sector
Stress levels
Crime levels
Health care data
 Benefits of Economic
Growth
Increases in economic growth should enable
more of everything to be produced.
Increases possibility of providing consumer
goods for all.
More consumer goods could be equated with
better standard of living.
Wealth generated may trickle down to those
who are poor by means of income distribution
– through taxes and benefits, etc.
 Benefits of Economic
Growth
Improved standard of living
associated with increase in
the availability of luxury
goods
In addition
Infrastructure building like
roads, rail, energy,
communication network etc.
Health and education
provisioning
Costs of Economic Growth
Not all income distributed equally and
Wealth often in the hands of a few
Trickle down of income not necessarily
always work in practice
Corruption may reduce redistribution
effects
Growth funded in part by spending in
weapons which do not benefit the
population as a whole.
Costs of Economic Growth
Environmental problems
Negative externalities
Pollution – dumping of hazardous waste
Environmental degradation – over farming
reduces productivity of the soil, deforestation
damage to eco-systems and reduction in bio-
diversity
Non- renewable resources – finite resources
Thank You