What is the difference between Economic Development and Economic Growth?

What is the difference between Economic Development and Economic Growth?

It is correctly recognized that the terms economic development and economic growth are taken as synonym. But, Prof. Schumpeter in his book “The Theory of Economic Development” (1911) has made clear distinction between economic development and economic growth. Similarly, Ursula Hicks, Alfred Kindleberger etc. have also laid stress on the different meaning of these terms. The main points of differences between them are stated below:

(i) Single Dimensional and Multi-Dimensional:

Economic growth is single dimensional which is concerned with increase in national and per capita income. On the contrary, economic development is multi-dimensional. It is concerned with both income and structural changes. In fact, economic development is a broad term.

(ii) Qualitative Changes:

In the opinion of Prof. J.K. Mehta, the terms development and growth are not synonymous. ‘Growth’ is quantitative whereas ‘development’ is qualitative.

(iii) Spontaneous and Discontinuous Changes:

To quote Prof Schumpeter, “Development is discontinuous and spontaneous changes in the stationary state which for ever alters and displaces the equilibrium state previously existing while growth is a gradual and steady change in the long run which comes about by general increase in rate of saving and population.” Therefore, the term ‘development’ is used for spontaneous and discontinuous changes. The term ‘growth’ is used for continuous and steady changes.

(iv) Economic Development implies Economic Growth:

Some economists used the term economic development to describe the determinants of economic growth, such as changes in techniques of production, in social attitudes and in institutions. Due to these changes the national income increases and is called economic growth. In this regard, development is the determinant of growth.

(v) Special Problems of Underdeveloped Countries:

Prof. Ursula Hicks has correctly stated, “Development should relate to backward countries, where there is possibility of developing and using hitherto unused resources. The term growth is applicable to economically advanced countries, where most of the resources are already known and developed.”