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    Class 6 Economic Growth and Development

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    Lakshmi Arora
    Economic growth refers to an increase in the production of goods and services in an economy over a period of time, usually measured in terms of increase in gross domestic product or GDP. Economic development refers to the process of improving the quality of life and economic well-being of a country's citizens. Key differences are that economic growth is quantitative while development has qualitative aspects, growth focuses on short term indicators like GDP while development has long term goals like reducing poverty and inequality, and growth can occur without equal development of the population.

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    Class 6 Economic Growth and Development

    Uploaded by

    Lakshmi Arora
    5 views16 pages
    Economic growth refers to an increase in the production of goods and services in an economy over a period of time, usually measured in terms of increase in gross domestic product or GDP. Economic development refers to the process of improving the quality of life and economic well-being of a country's citizens. Key differences are that economic growth is quantitative while development has qualitative aspects, growth focuses on short term indicators like GDP while development has long term goals like reducing poverty and inequality, and growth can occur without equal development of the population.

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    Economic growth refers to an increase in the production of goods and services in an economy over a period of time, usually measured in terms of increase in gross domestic product or GDP. Economic development refers to the process of improving the quality of life and economic well-being of a country's citizens. Key differences are that economic growth is quantitative while development has qualitative aspects, growth focuses on short term indicators like GDP while development has long term goals like reducing poverty and inequality, and growth can occur without equal development of the population.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    5 views16 pages

    Class 6 Economic Growth and Development

    Uploaded by

    Lakshmi Arora
    Economic growth refers to an increase in the production of goods and services in an economy over a period of time, usually measured in terms of increase in gross domestic product or GDP. Economic development refers to the process of improving the quality of life and economic well-being of a country's citizens. Key differences are that economic growth is quantitative while development has qualitative aspects, growth focuses on short term indicators like GDP while development has long term goals like reducing poverty and inequality, and growth can occur without equal development of the population.

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    Economic Growth and Development

    Economic Growth
    • Economic growth can be defined as an increase in the
    value of goods and services produced in an economy
    over a period of time.

    • It is calculated in terms of % increase in GDP or Gross


    Domestic Product.
    Extensive and Intensive Growth
    • An increase in the total output is referred to as
    ‘extensive’ growth whereas an increase in the output
    per capita is called as ‘intensive’ growth.

    • Intensive Growth is important in the context of


    increase in the standards of living of the population
    of the country and as a measure of level of inequality.

    • Whereas, Extensive Growth is extremely significant


    when one wants to examine the aggregative
    phenomenon.
    Factors of Economic Growth
    • Capital Formation: More capital generally means
    more production, and more production means more
    growth.

    • Capital-output ratio: Number of units of capital that


    are required in order to produce one unit of output.

    • Occupational Structure

    • Technological Progress
    Limitations of Economic Growth
    • Inequality can not be addressed.

    • Negative externalities are not considered.

    • Loss of non-renewable resources.


    Economic Development
    • Economic development is a combination of market
    productivity and the welfare values of the nation.

    • Traditional approach: It is assumed that changes in


    GNP would trickle down to people in form or another.
    This is known as ‘trickle- down effect’.

    • Modern approach: Economic development is


    generally defined to include improvements in
    material welfare, eradication of mass poverty, along
    with change in production structure from agriculture
    to industry
    Economic Growth V/S Economic Development
    • Growth we mean numerical increase in some
    parameters and when we use the term development
    we mean numerical as well as qualitative progress.

    • If economic growth is properly used for development, it


    results in accelerating the growth and ultimately in
    greater population coming under the arena of
    development.

    • Similarly, high growth with low development and ill-


    cared development finally results into fall in growth.
    Basis Economic Growth Economic Development
    Meaning It is the positive change in the It involves rise in the level of
    real output of the country in a production in an economy along
    particular span of time. with the advancement of
    technology, improvement in living
    standards and so on.
    Concept Narrow Broad
    Scope Increase in the indicators like Improvement in life expectancy
    GDP, per capita income etc. rate, infant mortality rate, literacy
    rate and poverty rates.
    Term Short term process Long term process
    Basis Economic Growth Economic Development
    Applicable to Developed Economies Developing Economies
    Measured by Upward movement in Upward movement in real
    national income. national income.
    Changes Quantitative changes Qualitative and quantitative
    changes
    Type of process Automatic Manual
    When it arises? In a certain period of time. Continuous process.
    Inclusive Growth
    • World Bank: Inclusive Growth refers both to the pace
    and pattern of growth, which are interlinked and must
    be addressed together.

    • United Nations Development Program (UNDP), inclusive


    growth is “the process and the outcome where all
    groups of people have participated in the organisation
    of growth and have benefited equitably from it”.

    • OECD (Organisation for Economic Co-operation and


    Development), inclusive growth is economic growth
    that is distributed fairly across society and creates
    opportunities for all.
    Inclusive Growth
    Features of Inclusive Growth
    Underdevelopment
    Common characteristics of Underdeveloped countries
    • Scarcity of Capital
    • Rapid population growth and high dependency
    • Low Levels of Productivity
    • Technological Backwardness
    • High levels of unemployment
    • Low human wellbeing
    • Income Inequality
    • High Poverty
    Underdevelopment
    • The World Bank classifies countries into four categories
    based on per capita income:
    • Low-income countries (< $1,035)
    • Lower-middle-income countries ($1,036–$4,045)
    • Higher-middle-income countries ($4,046–$12,535)
    • High-income countries (>$12,536)
    Distinguish between economic growth and economic development.
    (RBI Gr B 2012 - 10 marks, 400 words)

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