Main differences between growth and economic development

It has not been many years since we came out of the last great economic crisis, the euro crisis of 2008. In fact, despite the fact that the situation is no longer as critical as before, the consequences of These are still valid in part of the globe, so we still cannot talk about a recovery total.

However, fortunately it seems little by little the different countries are improving their situation and it is observed in comparison with the first years of crisis some economic growth and development. As far as these last two terms are concerned, they are often considered virtually identical synonyms.

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

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Economic growth: basic concept

Economic growth is understood as that situation or economic reality in which

the set of goods and services produced per year exceed 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 immediately preceding period (usually a year), with a greater volume of income.

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

This growth can lead to an increase in the well-being of the population as a whole, as there is greater economic capacity on the part of the territory to seek the benefit of citizens. Now, although we are talking about something that usually leads to said improvement, it does not always necessarily imply it, not being necessary for there to be economic growth that the capital increase is reflected in the quality of life of the whole of the population.

And it is that economic growth is defined as a merely quantitative factor and directly measurable through the existing capital figures. It can be assessed from different statistical indicators, among which stands out as the main Gross Domestic Product or GDP.

What is economic development?

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

Economic development occurs when the growth of the economy translates into a progress of the as a whole of the community that inhabits the country or territory, in an equitable manner and affecting diverse scopes.

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

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

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Main differences between growth and economic development

Observing the previous definitions of development and economic growth allow us to indirectly glimpse some of the main differences between the two concepts. However, to make them more evident, we are going to delve into what aspects allow us to differentiate between economic growth and economic development.

1. what does it apply 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, development means that this growth or the economic situation of the country in question will be applied to improve the well-being of each of its inhabitants.

2. Economic development needs growth

They also differ in that while economic development generally requires economic growth to be effective, the latter does not necessarily need or lead to development. Likewise, for the economic development of a country to occur, growth may be necessary, but it is not enough to generate it: requires a correct application of the benefits. In addition, while economic growth refers mainly to economics in the case of the development we tend to focus more on the structural and social changes that can result of the.

3. Qualitative or quantitative indicators

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

4. degree of stability

Finally, it should be noted that while economic growth is you can easily see clipped and move to a situation of decrease, in the case of economic development, this is usually more stable in terms of the greater part of its advances, although it can also be profoundly influenced by the alteration of the economy.