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What is Economic Development? Growth and approaches

DEFINITION OF ECONOMIC DEVELOPMENT

This approach emerged because overemphasis on quantitative goals such as increase in GDP levels often made nations ignore the equally essential non-economic parameters such as health, education, life expectancy, and quality of life.

  • Economic development is defined as the process of increase in volume of production along with the improvement in technology, a rise in the standards of living, health, education, overall quality of life, etc.
  • To understand the two terms “economic growth” and “economic development”, we will take an example of a human being. The term “growth of human beings” simply means increase in their height and weight, which is purely physical. But if you talk about “human development”, it will take into account both the physical and abstract aspects such as maturity level, attitudes, habits, behaviour, feelings, intelligence, and so on.
  • Similarly, the growth of an economy can be measured through the increase in its size in the current year in comparison to previous years, but economic development includes not only physical but also non-physical aspects that can only be experienced, such as improvement in the lifestyle of inhabitants, increase in individual income, improvement in technology and infrastructure, etc.
  • Therefore, we can say that it is a much bigger concept than economic growth. In other words, it includes economic growth. In context of India, we can say that India is witnessing a period of fast economic growth but slow economic development.

Key Differences between Economic Growth and Economic Development

The fundamental differences between economic growth and development are explained in the following points:

  1. Economic growth is the positive change in the real output of the country in a particular span of time. Economic development involves a rise in the level of production in an economy along with the advancement of technology, improvement in living standards, and so on.
  2. Economic growth is one of the essential prerequisites of economic development. However, it is not the only requirement for economic development.
  3. Economic growth enables an increase in the indicators such as GDP, per capita income, etc. On the other hand, economic development enables improvement in the life expectancy rate, infant mortality rate, literacy rate, and poverty rates.
  4. Economic growth results in quantitative changes, but economic development brings both quantitative and qualitative changes.
  5. Economic growth can be measured in a particular period. On the other hand, economic development is a continuous process, which can be seen in the long run.

INCLUSIVE GROWTH 

  • Inclusive growth is that economic growth which benefits all the sections of society.
  • Inclusive growth basically means making sure everyone is included in growth, regardless of their economic class, gender, sex, disability, and religion.
  • The inclusive growth approach takes on long-term perspective, and the focus is on productive employment rather than a mere income redistribution among poor people.
  • With liberalization, the benefits of economic growth have been cornered by a few sections such as rich and middle class. The impact of economic growth on poor has been little. As a result, the emphasis on inclusive growth is necessary.

Approaches to Attain Inclusive Growth

Trickle down approach

The trickle down approach is a term used to describe the belief that if high income earners gain an increase in their income, their increased income and wealth benefits various sections of the society. For instance, if a person earns more, then he spends more. His expenses are income of other persons.

Direct attack on poverty through government schemes

Trickle down approach has not been completely successful in attainment of inclusive growth. Benefits of economic growth have overlooked poor sections of the society. The government has launched various schemes for the welfare of particularly the poor section of the society. This approach is more effective to bring inclusive growth because it is specifically targeted towards poor people.

Read more:https://www.brainyias.com/sectors-of-indian-economy/

Indian Economy

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