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Economic Growth Vs. Economic Development
Economic growth �Economic growth is the increase of per capita gross domestic product (GDP) or other measure of aggregate income, typically reported as the annual rate of change in real GDP. �Economic growth is primarily driven by improvements in productivity, which involves producing more goods and services with the same inputs of labor, capital, energy and materials.
Economic Development �Economic development is the increase in the standard of living in a nation's population with sustained growth from a simple, low-income economy to a modern, high-income economy. Also, if the local quality of life could be improved, economic development would be enhanced. Its scope includes the process and policies by which a nation improves the economic, political, and social well-being of its people.
Sources of economic growth �Natural factors �Human capital factors i. e. quality �Physical capital and technological factors �Institutional factors such as banking system, legal system, education system, political stability etc.
Consequence Increased negative externalities Propagation of inequality Higher income Improved economic indicators Higher revenues for government
Sources of Economic development �Education leads to more gender equality, improved levels of health �Health care coupled with education facilities improve the quality of workforce, leading to increase in productivity �Infrastructure : better facilities and services such as roads, transport, communication �Political stability
Characteristics of developing economies � Low standards of living, low incomes, inequality, poor health, inadequate education � Low level of productivity � High rates of population growth and dependency burden � High and rising levels of unemployment and underemployment � Substantial dependence on agricultural production/primary sector � Prevalence of imperfect markets i. e. Lack of banking, legal system, adequate infrastructure, imperfect information. � Dominance, dependence in terms of international relations.
What is poverty? � WHO defines poverty as �Poverty is associated with the . undermining of a range of key human attributes, including health. The poor are exposed to greater personal and environmental health risks, are less well nourished, have less information and are less able to access health care; they thus have a higher risk of illness and disability.
Absolute poverty �Absolute or extreme poverty is when people lack the basic necessities for survival Relative poverty �As per European Commission, people are said to be living in poverty if their income and resources are so inadequate as to preclude them from having a standard of living considered acceptable in the society in which they live.
�Because of their poverty they may experience multiple disadvantages through unemployment, low income, poor housing, inadequate health care and barriers to lifelong learning, culture, sport and recreation. They are often excluded and marginalised from participating in activities (economic, social and cultural) that are the norm for other people and their access to fundamental rights may be restricted.
Developing countries differ from each other on the basis of : �Resource endowment may differ. �Historical background: Most have been colonized. �Geographic and demographic factors �Ethnic and religious breakdown �Structure of industry : some may heavily depend on primary sector while other may not. �Per capita income levels �Political structure : democracies, monarchies, military rule, single party states,