General Studies: Economic Growth and Development for UPSC, SSC and Banking Exams

General Studies: Economic Growth and Development 

Economic Growth:

It is a quantitative aspect, which generally refers to a long-term tendency reflected by an increase in the flow of goods and services produced by the economy. Economic growth is conventionally measured as a percentage in crease in GDP or GNP or per capital NDP during 1 year. Per capital NDP is the most appropriate measure of economic growth.

                                                     NNP₂ - NNP₁
 Economic Growth Rate =  ------------------------------
                                                       NNP₁

 Where,
                   NNP₂ = Net National Product of current year
                  NNP₁ = Net National Product of last year

Economic Development:

It is a qualitative aspect, unlike economic growth which is a quantitative aspect. It means growth accompanied by welfare or equity. Economic development is multi-dimensional measure, while economic growth emphasis on production. i.e., GDP and per capital income, economic development emphasis upon welfare, equality and quality.

                                                          GDP₂ - GDP₁
Economic Development Rate = --------------------------
                                                             GDP₁

Where,
                GDP₂= Growth Development Product of current year
                GDP₁= Growth Development Product of last year

Measurement of Economic Development:

There are various models to measure economic development and comparative situation of different countries.

• Purchasing Power Parity method
• Human Development Index
• Green GNP
• Net economic welfare
• Poverty Index
• Basic necessities
• Physical Quality of life index
• National prosperity index
• Gender based development index