Economic Growth
In strictly economic terms, economic growth occurs when an economy achieves an increase in its national income, measured by Gross National Product (GNP), in excess of its rate of population growth. This will lead to an increase in GNP per capita. For many years it was assumed that the existence of poverty in many of the world's poorer economies could be eradicated if these countries managed to sustain economic growth over a period of time. As a result of economic growth was seen as synonymous with economic development. If economies grew they would also experience development. It was assumed that increased availability of goods and services in an economy would lead to a 'trickle down' effect which would have an impact upon all, including the poorer members of society, in terms of jobs and other economic benefits. In reality however, despite the fact that in recent years many developing countries have achieved quite high growth rates, it has been observed that, although economic growth has resulted in benefits for poorer members of society in some countries, in others the levels of living of the mass of the population remained unchanged. In some cases this level may even have deteriorated. As a result a wider perception of economic development is now accepted which is related to, but distinct from, economic growth.
Economic Development
In it's 'World Development Report' of 1991 the World Bank offered the following view of development, The challenge of development ... is to improve the quality of life. Especially in the world's poor countries, a better quality of life generally calls for higher incomes - but it involves much more. It encompasses as ends in themselves better education, higher standards of health and nutrition, less poverty, a cleaner environment, more equality of opportunity, greater individual freedom, and a richer culture life.
Although this statement acknowledge that economic growth is important it makes it clear that higher income it self is not sufficient to ensure that there is a rise in the quality of life for the citizens of a country. This is a much broader view of development than one confined purely to increases in GNP. It is one that provides a different focus for those responsible for development policy planning, and moves away from measures designed purely to increase and maintain an economic growth target. Todaro states that development must be seen as a multidimensional process.
Development ... must represent the whole gamut of change by which an entire social system, tuned to the diverse basic needs and desires of individuals and social groups within that system, moves away from a condition of life widely perceived as unsatisfactory toward a situation or condition of life regarded as materially and spiritually better. (M.P. Todaro, Economic Development, 1995)
According to Todaro and others the movement to a better life can be analyzed and measured against three core values:
SUSTENANCE: The ability to meet basic needs
SELF-ESTEEM: To be a person
FREEDOM FROM SERVITUDE: To be able to chose
Source: Colin Bamford, Keith Brunskill, Gordon Cain, Sue Grant, Stephen Munday, and Stephen Walton, As Level and A Level ECONOMICS, Cambridge University Press, 2002
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