Econ 21 Lesson 1

ECON21- ECONOMIC DEVELOPMENT
LESSON 1- INTRODUCTION TO ECONOMIC DEVELOPMENT
A. OVERVIEW OF ECONOMIC DEVELOPMENT
What is Economic?
The term economic refers to anything related to the production, distribution, and consumption of
goods and services. It describes aspects of the economy or the use of resources to create and
exchange value. In various contexts, "economic" can describe activities, policies, conditions, or
systems that are concerned with wealth, trade, industry, or financial management.
For example:
Economic growth refers to the increase in a country's output or GDP.
Economic policy involves government actions that influence the economy, such as tax rates or
interest rates.
Economic activity refers to the actions involved in producing, buying, and selling goods and
services.
What is Economic Development?
Economic development refers to the process through which a country improves the
economic, political, and social well-being of its people. Unlike economic growth, which
focuses solely on increasing a country's output (measured by GDP), economic
development involves a broader spectrum of progress, including:
1. Improving living standards: Increasing access to better healthcare, education,

housing, and sanitation.
2. Reducing poverty and inequality: Ensuring that wealth and resources are
distributed more equitably across the population.
3. Building infrastructure: Enhancing transportation, energy, and communication

systems to support industrial and social activities.
4. Enhancing human capital: Developing a skilled and healthy workforce through

education and healthcare.
5. Sustainability: Promoting long-term growth while ensuring the responsible use of
environmental resources.
It is a long-term process that focuses on improving quality of life and creating

opportunities for all individuals in society.
B. DISTINCTION BETWEEN ECONOMIC GROWTH AND ECONOMIC

DEVELOPMENT
Definition of Economic Development and Economic Growth
Economic Development: Economic development refers to the qualitative improvement

in the standard of living, poverty reduction, income distribution, education, health, and
overall well-being of a population. It involves long-term structural changes in the
economy that lead to improved living standards.
Economic Growth: Economic growth refers to the quantitative increase in a country’s

output or Gross Domestic Product (GDP). While growth is measured by the rise in GDP,
development is more holistic, encompassing both quantitative and qualitative
improvements in society.
Differences between Economic Growth and Economic Development
Economic Growth:
● Focuses on GDP growth and the increase in production.

● Mainly quantitative.
● Short-term focus.
Economic Development:
● Involves improvement in living standards, healthcare, education, and equitable

distribution of income.
● Qualitative and long-term.
● Includes non-economic factors like human rights, political stability, and
environmental sustainability.
C. MEASURING DEVELOPMENT
Key Indicators of Economic Development
● Gross Domestic Product (GDP): Total market value of all goods and services
produced in a country.
● Human Development Index (HDI): A composite index measuring life expectancy,
education, and per capita income.
● Gini Coefficient: Measures income inequality within a nation.
● Poverty Rate: The percentage of the population living below the national poverty
line.
● Unemployment Rate: The percentage of the labor force that is unemployed and
actively seeking employment.
D. IMPORTANCE OF ECONOMIC DEVELOPMENT
Economic development is crucial for several reasons, as it leads to both

short-term improvements in the standard of living and long-term, sustainable
growth for a country. Here are the key reasons why economic development is
important:
1. Improved Living Standards

Economic development leads to higher incomes, better access to education,
healthcare, housing, and overall improvements in the quality of life for citizens.
2. Poverty Reduction
By creating jobs, increasing productivity, and improving wealth distribution,
economic development helps reduce poverty and improves access to essential
services for lower-income groups.
3. Job Creation
Economic development stimulates business growth and industrialization, which
leads to job opportunities and a reduction in unemployment rates.
4. Infrastructure Development
Economic development fosters investments in vital infrastructure, such as roads,
schools, hospitals, and energy, which supports further growth and improves
quality of life.
5. Technological Advancement
As economies develop, they often adopt new technologies that increase
productivity, improve efficiency, and encourage innovation, further driving
economic growth.
6. Social Progress
Economic development often leads to improvements in education, healthcare,
and social welfare systems, resulting in a more educated and healthier
population.
7. Sustainability
Sustainable economic development incorporates practices that ensure growth
while preserving environmental resources, leading to long-term benefits for
society and future generations.
8. Reduction of Inequality
Proper economic development policies focus on inclusive growth, which aims to
distribute wealth more evenly and reduce social inequalities across different
regions and communities.
9. Political Stability
Economically developed countries tend to experience more political stability, as a
growing economy can reduce discontent, provide social services, and address
issues that lead to unrest.
10. Global Competitiveness

Economic development helps a country become more competitive in the global
market by improving the skills of its workforce, adopting advanced technologies,
and increasing its export capacity.
In summary, economic development is key to improving the quality of life,

creating equitable opportunities, and ensuring sustainable growth for both current
and future generations.

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ECON21- ECONOMIC DEVELOPMENT

LESSON 1- INTRODUCTION TO ECONOMIC DEVELOPMENT

A. OVERVIEW OF ECONOMIC DEVELOPMENT

Economic growth refers to the increase in a country's output or GDP.

What is Economic Development?

1. Improving living standards: Increasing access to better healthcare, education,

3. Building infrastructure: Enhancing transportation, energy, and communication

4. Enhancing human capital: Developing a skilled and healthy workforce through

It is a long-term process that focuses on improving quality of life and creating

B. DISTINCTION BETWEEN ECONOMIC GROWTH AND ECONOMIC

Definition of Economic Development and Economic Growth

Economic Development: Economic development refers to the qualitative improvement

Economic Growth: Economic growth refers to the quantitative increase in a country’s

Differences between Economic Growth and Economic Development

● Focuses on GDP growth and the increase in production.

● Involves improvement in living standards, healthcare, education, and equitable

Key Indicators of Economic Development

D. IMPORTANCE OF ECONOMIC DEVELOPMENT

Economic development is crucial for several reasons, as it leads to both

1. Improved Living Standards

10. Global Competitiveness

In summary, economic development is key to improving the quality of life,

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