Simply by “ Economic Development we mean the continues increase in real income of a country over a long period. Moreover, it is also furnished with technical and industrial changes in the society.” Like development, the economists also present the concept of Economic Growth. The Economic Growth represents increase in the production of goods and services of a country. Moreover, it is attached with the increase in the efficiency of the factors of production.
From such simple definitions we find that economic development is a qualitative term while economic growth is a quantitative term. As the increase in the quantity or volume of a thing denotes its growth. Therefore, if a country’s output, national income, per ca pita income, consumption, savings and investment increase-such phenomenon represents growth. Therefore, if the level of national production increases due to better use of factors of production, better techniques of production or better organization, it represents economic growth.
In the words of Kindleberger, Economic Growth means more output and changes in the technical and institutional arrangement. Growth not only implies more output but also more efficiency and more inputs. While “Economic Development is a wider concept and its goes beyond the changes in the structure of output and allocation of inputs.”
In the early stage any economy that grows is likely to develop and that which develops is likely to attain growth. But the countries which have already developed as US, UK, Germany, France, and Australia etc are desirous to keep on growing. While in the case of UDCs which have low incomes, growth and development go side by side.
Thus, we conclude that economic development means a sustained, and secular improvement in material well-being which may be reflected in an increasing flow of goods and services. “As” the definition of development has been presented in material terms. Thus, it includes social, cultural, political, moral and economic factors which contribute to material progress. Thus, economic development is economic because it aims at growing of the production of material commodities and services. It is social because it implies institutional changes in the society. It is moral because the idea of equality and social justice is involved in it. Because development policies imply a profound revolution. Thus, we say that Economic Development is wider than Economic Growth.
Despite above theoretical difference between Development and Growth, we will use both the terms as alternatives. Now we give certain definitions of economic development which will explain its meanings.
Definitions of Economic Development:
According to prof. Waston, “Economic Development shows the excess of consumption and production of a country as compared with increase in population. This increase in production is due to better combination and increase in the productivity of the factors of production”.
Prof. Williamson, “ Economic Development is a process whereby the people of a country utilize the available resources in such a way that the per ca pita income of the country increases”.
Prof. Higgins “ Economic Development is the increase in per ca pita and NI of a country.”
Prof. Arthur Lewis, “ Economic Development represents the per ca pita increase in the production of a country ”.
Profs. Meir and Baldwin, “ Economic Development is a process whereby the real NI of a country increases over a long period. “If” the increase in the real NI is more than the population increase then the per ca pita real income of the country will also increase”.
“If” we analyze Meir/Baldwin’s definition we find the following important features of Economic Development.
The procedure demonstrates the association of various specialized and managerial powers which result in increment of generation and changes on request side and also on supply side :
The changes on supply sides are as :
- Discovery of new resources
- Capital accumulation
- Changes in population
- Introduction of better techniques of production
- Improvement in skill,
- Social and institutional changes
The changes on demand side are as:
- Changes in size and nature of tastes of the people
- Changes in the level and distributional of NI,
- Changes in tastes of the people,
- Changes in social and institutional life.
- Increase in Real Gross National Product (GNP)
Economic development will take place when the real GNP of a country increases. To get the real GNP of the country, the GNP must be corrected by some index number. Now and again it happens that the GNP of a nation increments because of swelling such won’t speak to monetary advancement. Therefore, to know development we will have to deduct depreciation allowance from GNP to get NI.
- Long Period
To assess Economic Development, a period of 25 years must be kept in view. That is, if real GNP rises till period of 25 years it will be accorded as EconomicMEASUREMENT OF ECONOMIC DEVELOPMENT
To measurement economic development the following criteria are mostly used.
1.Increase in real GNP,
2.Increase in real per ca pita income,
3.Economic welfare criterion,
4.Social indicator criterion,
5.Human development criterion.
6.However, in the earlier days only the first two methods were adopted to measure economic development.