17 August 2010

Economic Growth and Development: Definition

What is the definition of economic growth and economic development? What is the difference between the two?

1. Economic Growth is an increase in economic output. It is a quantitative change.

2. Economic Development is more than just an increase in economic output. It is the change of an economy from one stage to another (higher) stage. It is a qualitative change.

In particular, economic development is the change of an economy from the agricultural stage to the industrial stage. So,

Development = Industrialisation ?

We have seen that this is an incomplete view. More correctly,

Development = Agriculture + Industry + Services
in that order

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