The term “economic growth” refers to the output that measures how much production of goods and services are produced in a country. It basically tells about the quantity of production. In simple words we can say that it is a process of increasing the value of goods and services produced in an economy over a period of time. It is referred to the rise in production, per capita income and in National income. And it can be measured in the nominal GDP or Real GDP.
Indicators of Economic growth:
- Increase in GDP
- Increase in Per Capita Income
- Increase in Per capita Consumption
- Increase in GDP: First we have to understand the word “GDP”. GDP is an Gross Domestic Production which means total amount of goods and services are produced within the country. So according to the indicator increase in GDP means that increase in the production of goods and services over the country.
- Increase in Per Capita Income: Per Capita Income referred to the total income of the person earned over a period of time is known as “Per Capita Income” To increase in per capita income is also a way to calculate the economic growth by dividing the national income of the country by its total population.
- Increase in Per Capita Consumption: In Per Capita Consumption, it tells about how much consumption/expenditure can be done over the period of time is known as “Per Capita Consumption”. To calculate the economic growth the total number of per capita consumption is obtained and dividing the total consumption expenditure by the total population.
Factors affecting Economic growth
- Natural Resources
- Human Resources
- Population growth
- Development in Infrastructure
- Natural Resources: Natural resource such as oil, Coal, Minerals, Natural gases etc. may helps stimulate the economic growth by shifting or increasing the country’s Production Possibility Curve.
- Human Resources: This is a significant aspect that contributes to a country’s economic growth. The rate of rise in a workforce’s skills and capacities ultimately boosts a country’s economic growth.
- Population Growth: This is also a important aspect of economic growth where the more population plays a role to contribute their different variety of skills to the economy.
- Technology: Innovation is must for the economic growth, the inventions plays a very important role to make increase in GDP. Due to the increasing technology we can get the good output at a low cost so that our country/economy will grow.
- Development in infrastructure: Making roads, trains, factories, machines etc. like things can provide the boost to the economy.
Economic Development refer to the growth in our standard living, After increase in goods and services how it will impact our quality of life, is our lifestyle have any development or not?. Its totally tells about the quality of life of a person.
If the per capita income of a person is increase then it will make any change in their life or not. That’s the economic development tells. So the economic development deals with the issue of poverty, unemployment, gender inequality etc. Inshort internal problems of the country. It is known as “Economic Development”
Indicators of Economic Development:
- HDI (Human Development Index)
- Inequality adjusted human development index
- Gender inequality index
- Human Development Index: The Human Development Index (HDI) is a metric for measuring a country’s development based on economic and social indicators. This tool is basically developed to measure the total development of the country to find out how much the life of an individual improved.
- Inequality adjusted human development index: As the word suggest “Inequality”. This is also a tool to measuring how much inequality has in our country.
- Gender Inequality index: In this tool used to measures the inequality between the genders males, female and transgender.
Factors affecting Economic Development
- Education and training
- Transportation and communications
- Infrastructural improvement
Education and training: Education and training plays a most important role to provide a better knowledge so that the quality of life enhances of peoples growth.
Transportation and communications: In this factor the transportation and communications are used to provide the finished goods to other cities so that the other cities people can consume it and fullfil their need and on the other hand communication also improves the quality of life like providing the communication from one place to other place.
Infrastructural improvement: Infrastructure development increases people’s quality of life. As a result, a rise in the rate of infrastructural development will result in a nation’s economic development.
Difference between Economic Growth and Economic Development
|Economic Growth tells about the quantity of production.
|Economic development tells about the quality of life.
|It is quantified by metrics such as real GDP growth or per capita income growth.
|It measured the quality of life via using some indicators like HDI, GII etc.
|Economic growth is uni-dimensional
|Economic development is multidimensional
|Economic growth indicates increases in national or per capita income.
|Economic growth represents improvements in a country’s standard of living.
|Economic growth is independent of the development
|Economic development can only happen if economic growth takes place.
|Indicators of economic growth are:
Per capita income
|Indicators of economic development
HDI (Human Development Index)
Inequality adjusted human development index
Gender inequality index