Main differences between growth and economic development

The economic growth of countries does not necessarily imply economic development.

It has not been many years since we emerged from the last major economic crisis, the euro crisis of 2008. In fact, although the situation is no longer as critical as it was in the past, the consequences of the crisis are still present in parts of the world, so that we cannot yet speak of a full recovery.

Fortunately, however, it seems that little by little the different countries are improving their situation and, compared to the first years of the crisis, we can observe economic growth and development. As far as the latter two terms are concerned, they are often considered practically identical synonyms.

But although they have a certain relationship with each other, the truth is that they actually refer to different concepts. For this reason, throughout this article we will give a brief explanation of the differences between economic development and economic growth. a brief explanation of the differences between economic development and economic growth..

The economic growth: basic concept

It is understood like economic growth to that situation or economic reality in which the set of goods and services produced per year exceeds those of the previous period.. In other words, we consider that we are in a situation of economic growth when the production of a country or territory is greater than during the period (usually year) immediately preceding, with a greater volume of income.

This growth is perceived per capita, i.e. it is derived from the increase in the value of the production of each worker.

This growth can lead to an increase in the welfare of the population as a whole.The economic capacity of the territory to seek the benefit of its citizens is greater. However, although we are talking about something that usually leads to such improvement, it does not always necessarily imply it, since it is not necessary for there to be economic growth that the increase in capital be reflected in the quality of life of the population as a whole.

Economic growth is defined as a purely quantitative factor, directly measurable through existing capital figures. It can be assessed on the basis of different statistical indicators, among which the Gross Domestic Product or GDP stands out as the main one..

What is economic development?

With regard to economic development, this concept refers to the socio-economic situation in which there is an increase in the quality of life of the inhabitants of a country, which increases the conditions of the citizens and their prosperity in a generalized manner.

Economic development occurs when the growth of the economy translates into progress for the whole community that inhabits the country or territory, in an equitable manner and affecting various areas.

On the other hand, economic development implies, for example, the improvement of health and education systems, infrastructure, life expectancy or economic capacity of each of the members of society. It also includes the development of more egalitarian and inclusive social policies.The concept of economic development, as opposed to growth, is based on the concept of growth, as well as on the increase of freedoms and rights (and, on the other hand, of duties) and of citizen participation in political and community life.

The concept of economic development, unlike that of growth, is not quantitative but qualitative, is not quantitative but qualitativeDevelopment is difficult to measure directly, and different mechanisms such as satisfaction indexes, measurement of the different aspects that influence quality of life, literacy or access to employment or training must be used.

Main differences between growth and economic development

Looking at the above definitions of economic growth and development, we can already indirectly glimpse some of the main differences between the two concepts. However, in order to make them more evident, we will now delve deeper into the aspects that make it possible to differentiate between economic growth and economic development.

1. What it applies to

To begin with, one of the main and most important differences is that while economic growth implies only the existence of a higher level of capital within the territory of the country. implies only the existence of a higher level of capital within the territory, development implies that this capital is not only used for the production of goods and services, but also for the production of goods and services.development implies that this growth or the economic situation of the country in question will be applied to the improvement of the welfare of each of its inhabitants.

2. Economic development needs growth

They also differ in that while economic development generally requires economic growth in order to be effective, the latter does not necessarily need or lead to development. Likewise, for a country's economic development to take place, growth may be necessary, but it is not sufficient to generate it: it requires a correct application of the benefits. Moreover, while economic growth refers mainly to the economic aspect, in the case of development we tend to focus more on the structural and social changes that may result from it.

3. Qualitative or quantitative indicators

Another difference is the way in which the indicator for each of them is obtained. While growth is a quantitative measure obtained from relatively simple mathematical calculations, calculating the level of economic development implies making a qualitative and not entirely accurate assessment of the general situation of the population.

Degree of stability

Finally, it should be borne in mind that while economic growth is a quantitative measure can easily be cut back and move into a situation of decline, while economic development is usually more stable in terms of most of its progress, although it can also be profoundly influenced by economic disruption.In the case of economic development, this tends to be more stable in terms of most of its progress, although it can also be profoundly influenced by economic disruption.