Distinguish between 'economic development' and 'economic growth'. What are the factors which determine economic development?

March 5, 2022 February 21, 2024

Differences between Economic Growth and Economic Development

Economic growth is a narrow concept (It studies only increase in real per capita income) while economic development is a broad concept (it studies increase in real per capita income as well as economic welfare).
Economic growth is only a quantitative concept whereas economic development is both a quantitative as well as a qualitative concept.
Economic growth ignores distribution of income. Economic development studies distribution of income.
Economic growth is the essential element of progress of developed countries. Economic development is the essential element of the progress of under developed countries.
Economic development accounts for structural, institutional and technical change in the economy while economic growth does not.

Factors responsible for economic development:
Capital Formation: higher saving for higher capital formation
Structural, Institutional and Technical Changes
Increase in Real per Capita Income
Marketable Surplus of Agriculture: rise in productivity to transform from substantial to commercial agriculture.
Conditions in Foreign Trade: in a country has proved to be beneficial for earning forex and decreasing current account deficit
Economic System: enhanced economic planning and capitalistic approach can be beneficial
Other factors includes: Desire to Develop; Less or no corruption; Social Organization; Human Resources and Increase in level of technical knowledge.