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Explain with the help of examples, the difference between economic growth and economic development.

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The difference between economic growth and economic development can be understood from the following discussion.

Economic growth:

  • When we use the term ‘growth’ it means we are talking about ‘economic growth’.
  • The increase in the total output of an economy in the long run is known as economic growth.
  • By total output we mean that there is a continuous increase in the real national income and the real per capita income which we call as economic growth.
  • Such growth is possible due to the increase in supply of factors of production like, land, capital, labour and entrepreneurial ability of the people and increase in the productivity of these factors.
  • When the supply of factors of production, their availability, productivity and efficiency increase on a continuous basis it leads to rise in ‘real national income’ and ‘real per capitp income’. This rise is known as economic growth. Since, rise in income can be measured numerically and also seen we consider economic growth as a ‘quantitative change’.
  • One can gauge a country’s economic status by knowing its economic growth. Rate of economic growth also helps to compare the economies of two countries.

Economic development:

  • When there is continuous rise in total output by the means of real national income and real per capita income of the economy i.e. quantitative aspects along with rise in qualitative aspects it is called economic development.
  • Economic development is a much wider concept as compared to ‘economic growth’. It is a continuous and multidimensional process which includes economic growth, economic welfare and economic progress.
  • When we say that economic development is taking place it means that apart from monetary aspect the country is also showing progress in economic and social structure.
  • Thus, during economic development, along with economic progress, progress takes place in the society too.
  • Change is seen even in the structure of national income. The contribution of agriculture as percentage of the total national income decreases whereas the contribution of industry and service sector increases.
  • The disguised unemployed of agricultural sector get employed in other sectors.
  • The country starts using modern technology which saves time and money and hence increases productivity.
  • The country also innovate various new seeds for agriculture. This changes institutional structure which then changes the methods of production and distribution.
  • Slowly and gradually there is reduction in poverty, unemployment and inequalities.


  • Economic growth is a very narrow concept and it mainly focuses on increasing the real national income and per capita income. On the other hand economic growth is a much wider concept which over and above the objectives of economic growth also aims at attaining social welfare of the people.
  • Economically weaker countries first aim at economic growth. Once they attain a level, they start aiming for economic development.

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