Growth and Development

12 Key excerpts on "Growth and Development"

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  Economic Development in Ghana and Malaysia

  A Comparative Analysis

  • Samuel K. Andoh, Bernice J. deGannes Scott, Grace Ofori-Abebrese(Authors)
  • 2020(Publication Date)
  • Taylor & Francis

    (Publisher)

  3 Economic Growth and Development theories Introduction: Growth and Development Economic growth and economic development are not the same. The two terms are sometimes used interchangeably. But even those who do so acknowledge that there is a difference. 1 In Simon Kuznets’s Nobel Prize lecture in 1971, he defined economic growth as “a long-term rise in the capacity [of a country] to supply increasingly diverse economic goods to its population”. He goes on to further suggest that “this growing capacity [is] based on advancing technology and the institutional and ideological adjustments”. Economic growth entails a sustained increase in output over time. This output, referred to as the real gross domestic product (GDP), is the monetary value of all final goods and services produced in an economy over a period, say one year, one quarter, or one month. The real GDP, when divided by the population of the country, gives what is called the real GDP per capita, or what each person in the country will get if the resulting income were divided equally amongst the population. Since the output is never divided equally among the population (some people get less than others), neither the change over time in GDP nor the change over time in per capita GDP accurately captures what economic development really is. Nonetheless, economic growth is essential for economic development. One can liken economic growth to an increase in the size of the pie. The bigger the pie, the bigger the piece each person could get. Economic growth is necessary for economic development; it is, however, not sufficient. Economic development is seen in better health for citizens, increased life expectancy, increased literacy rates and reduced poverty. These outcomes require deliberate policy actions

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  Development Management of Transforming Economies

  Theories, Approaches and Models for Overall Development

  • Fabiana Sciarelli, Azzurra Rinaldi(Authors)
  • 2016(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  Part I Development 3 © The Author(s) 2017 F. Sciarelli, A. Rinaldi, Development Management of Transforming Economies, DOI 10.1057/978-1-137-59911-7_1 1 Defining Development When approaching issues surrounding the development of economic systems it is necessary to focus first on the object of our study. Defining development is not an easy task. We could start by clarifying an ambi- guity that often hides behind the concepts of Growth and Development. These two terms are often wrongly used as though they were interchange- able with one another. However, while development includes growth, growth does not include development. By growth we refer to an increase in the Gross Domestic Product (GDP) of a country or rather of its ability to produce goods and services. Since the classical approach, many theories now involve growth and are based mainly on the principle of capital accumulation. Though initially pertaining only to physical capital (for example, machinery), this process was later extended to include many other variables such as intellectual capital and especially human capital. This will be discussed later. We have stated that growth corresponds to the increase of the GDP of a country and that development goes beyond this definition. Schumpeter was the first to distinguish between Growth and Development, proposing to measure in development a more complex and detailed phenomenon than just the increase in domestic production. 4 When we talk about development, we refer to an economic growth process that occurs alongside a transformation of the society that could ultimately increase the welfare of the population. Countries that are at a developing stage face a transition that leads them from a condition of social and economic underdevelopment to a higher level of welfare and a better employment of productive capacities.

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  Green Economy

  • (Author)
  • 2014(Publication Date)
  • Orange Apple

    (Publisher)

  Economic growth versus economic development Economic development refers to social and technological progress. It implies a change in the way goods and services are produced, not merely an increase in production achieved using the old methods of production on a wider scale. Economic growth implies only an increase in quantitative output; it may or may not involve development. Economic growth is often measured by rate of change of gross domestic product (eg., percent GDP increase per year.) Gross domestic product is the aggregate value-added by the economic activity within a country's borders. Economic development typically involves improvements in a variety of indicators such as literacy rates, life expectancy, and poverty rates. GDP does not take into account other aspects such as leisure time, environmental quality, freedom, or social justice; alternative measures of economic wellbeing have been proposed (more). A country's economic development is related to its human development, which encompasses, among other things, health and education. Intensive versus extensive growth A closely related idea is the difference between extensive and intensive economic growth. Extensive growth refers to the increase of overall wealth, while intensive growth refers to the increase of per capita wealth. Unlike extensive growth, intensive growth is mainly driven by productivity growth and technological progress. While economies in the ____________________ WORLD TECHNOLOGIES ____________________ pre-industrialization period grew extensively, intensive growth is a relatively recent phenomenon that came with modern economic growth. Does growth create development? Dependency theorists argue that poor countries have sometimes experienced economic growth with little or no economic development; for instance, in cases where they have functioned mainly as resource-providers to wealthy industrialised countries.

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  Economic Development

  • E. Wayne Nafziger(Author)
  • 2012(Publication Date)
  • Cambridge University Press

    (Publisher)

  The two terms are not identical. Growth may be necessary but not sufficient for develop-ment. Economic growth refers to increases in a country’s production or income per capita ( Box 2-1 ). Production is usually measured by gross national product (GNP) , an economy’s total output of goods and services. Economic development refers to economic growth accompanied by changes in output distribution and economic structure. These changes may include an improvement in the material well-being of the poorer half of the population, a decline in agriculture’s share and an increase in services and industry’s share of GNP, an increase in the education and skills of the labor force, and substantial technical advances originating within the country. As with children, growth involves a stress on quantitative measures (height or GNP), whereas development draws attention to changes in capacities (such as physical coor-dination and learning ability or the economy’s ability to adapt to shifts in tastes and technology). The pendulum has swung between Growth and Development. A major shift came near the end of the United Nation (UN)’s first development decade (1960–70), which had stressed economic growth in poor countries. Because the benefits of growth often did not spread to the poorer half of the population, disillusionment with the decade’s progress was widespread, even though growth exceeded the UN target. In 1969, 14 2. What Is Economic Development? 15 BOX 2-1. COMPUTING GROWTH RATES Assume that in 2012, the gross national product (GNP) for India is Rs. (rupees) 50 trillion and its population 1.25 billion, so that GNP per capita is Rs. 40,000. The GNP in 2013, Rs. 60 trillion, must be divided by the GNP price deflator , 110 (corresponding to an annual inflation rate of 10 percent) to give a GNP of Rs. 54.545 trillion at constant (2012) prices. This figure, divided by the population in 2013, 1.26875 billion, nets a GNP per capita of Rs.

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  Technology, Globalization, and Sustainable Development

  • Nicholas A. Ashford, Ralph P. Hall(Authors)
  • 2011(Publication Date)
  • Yale University Press

    (Publisher)

  † See Daly (1994) for a discussion of the distinction be-tween Growth and Development that applies to developed as well as developing countries. 3.1 THE MEANING OF ECONOMIC DEVELOPMENT 3.1.1 Growth and Development Distinguished I n Chapter 1, we discussed fundamental concepts of economic growth and the metrics that might be used to measure that growth in terms of in-creased GNP and GDP. We also argued that not all increases in these metrics were necessarily good.

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  Sustainable Development in India and South-East Asia

  • Ishwar C. Dhingra(Author)
  • 2023(Publication Date)
  • Routledge

    (Publisher)

  2 Economic Development: Concept and Measurement

  2.1 Introduction

  A comparative study of nation states in South-East Asia and India need not be pursued in vacuum. We need to have a sound conceptual framework within whose dimensions an objective analysis can be pursued. We intend to present such a framework that will focus on the concept of economic development. We will also highlight the different criteria of development, besides Gross Domestic Product. We will conclude the chapter with an identification of criteria that can be used for purpose of comparison of countries at different levels of development.

  2.2 Meaning of Economic Development

  A decision tree, such as the one in Fig. 2.1 below, can help identify the biggest obstacles to growth. A concerted effort on all these fronts is required to attain economic development. But, what is economic development?

  Fig. 2.1: Problem: Low Levels of Private Investment and Entrepreneurship.

  2.2.1 ‘Development’ Distinguished from ‘Growth’

  Traditional View Traditionally, economic development has been considered as synonymous with economic growth. Economic growth has been defined as “an increase in real terms of the output of goods and services that is sustained over a long period of time, measured in terms of value added.” While National Income estimated at Current Prices (NICUP) is called nominal income, national income estimated at constant prices (NICOP) is called real national income.

  Modern View The traditional concept of viewing economic development as synonymous with economic growth was based on what came to be known as the “trickle-down strategy

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  Education and National Development

  A Comparative Perspective

  • Ingemar Faegerlind, Lawrence J. Saha(Authors)
  • 2016(Publication Date)
  • Pergamon

    (Publisher)

  PART 2 Dimensions of Development This page intentionally left blank 3 63 Education, Economic Growth and Employment E c o n o m i c Growth as Development THERE have been few models o f development which have enjoyed the prestige and influence o f the e c o n o m i c growth model. Both theoretically and empirically the notion o f e c o n o m i c growth has long been at the heart o f development thinking and has dominated policy and research at national and international levels. There have been many points o f view as to h o w e c o n o m i c growth is best measured. However, whether seen in terms o f increases in per capita income, a shift in the labor force from the agricultural to the indus-trial sectors, a rise in energy consumption or the expanded use o f high technology such as automobiles, telephones or television, there can be little d o u b t that the recent histories o f most Western societies, at least until n o w , have been characterized b y steady e c o n o m i c growth and increased productivity. 1 E c o n o m i c growth models are o f relatively recent origin, although most have links with 18th-century theories o f progress, as, for example, the theory articulated by A d a m Smith in An Inquiry into the Nature and Cause of the Wealth of Nations ( 1 9 7 0 ( 1 7 7 6 ) ) . In general, e c o n o m i c growth models have been concerned with des-cribing the advancement and well-being o f nations as wholes. Although some models may consider the attitudes and beliefs o f individuals within societies, it is societal advancement which is o f primary con-cern in most explanations o f e c o n o m i c growth. Furthermore, while acknowledging the importance o f the agricultural sector in e c o n o m i c systems, most e c o n o m i c models focus on the process o f industrializa-tion, and include its origin and growth and the way that it promotes or impedes e c o n o m i c growth.

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  Economics and Development Studies

  • Michael Tribe, Frederick Nixson, Andy Sumner(Authors)
  • 2010(Publication Date)
  • Routledge

    (Publisher)

  The central problem in the theory of economic development is to understand the process by which a community that was previously saving and investing 4 or 5 per cent of its national income or less, converts itself into an economy where voluntary saving is running at about 12 to 15 per cent of national income or more. This is the central problem because the central fact of economic development is rapid capital accumulation (including knowledge and skills with capital). We cannot explain any ‘industrial’ revolution (as the economic historians pretend to do) until we can explain why saving increased relatively to national income.

  (Lewis, 1954: 155)

  Many serious students of international development studies might ask why economic growth is considered to be so important. At a time in global development when many would question the justification for an emphasis on economic growth on environmental grounds, it should be clear that if the Millennium Development Goals (MDGs – United Nations, 2009a) are to be achieved to an acceptable degree, then economic growth is a necessary, but not a sufficient, condition. In other words, the achievement of higher standards of living across society as a whole requires economic growth. This implies that development studies specialists concerned with the welfare objectives embodied in the MDGs need to be aware of the economic factors associated with economic growth.

  A controversial but influential contribution to the discourse relating to poverty reduction is that of Dollar and Kraay (2002; 2004). However, their ‘Growth is Good for the Poor’ suffered from a number of shortcomings, notably the absence of a rigorous definition of poverty (‘the poor’) and of a clear methodological distinction between cross-section and time-series analysis (Amann et al., 2006). Despite the heated controversy generated by the Dollar and Kraay paper, the logical connection between economic growth and poverty reduction – both absolute and relative – would not be disputed by most economists.

  The definition of poverty, and of ‘the poor’, is explored systematically in Chapter 9

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  Global Development

  The Basics

  • Daniel Hammett(Author)
  • 2023(Publication Date)
  • Routledge

    (Publisher)

  3

  Understanding and measuring development

  DOI: 10.4324/9781003155652-3

  As our understandings of global development have shifted, so too have the ways in which development is defined and measured. Economics-based approaches have generally held sway over Western attitudes to development – however, these approaches have increasingly been challenged by moves towards more holistic understandings. At the same time, there has been growing sensitivity to ‘alternative’ and indigenous understandings of development, many of which pre-date dominant Western approaches.

  Infusing the debates outlined in this chapter are differing agendas and ideologies which, in turn, produce different sets of priorities and measures for development. At the crux of the tensions between different approaches to and theories of development are differing beliefs as to not only what ‘development’ is but also what is ‘worthwhile’ development, and what can be learnt from experiences when development agendas produce negative or bad outcomes.

  Development as economic growth

  Mainstream global development policies and donors continue to focus on economic growth (driven by industrialisation) as the primary route to poverty reduction and the realisation of development goals. This approach is evident in the work of influential figures including Paul Collier and Jeffrey Sachs. Drawing on Keynesian economics, Collier (2008) argues we should be less worried about the type of economic growth than about the absolute level or amount of growth. His argument is, in essence, that high levels of economic growth will de facto drive poverty reduction and development and he points to the slow economic growth rate of the poorest countries as evidence for this. Meanwhile, Jeffrey Sachs’ (2005)

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  Trading Economics

  A Guide to Economic Statistics for Practitioners and Students

  • Trevor Williams, Victoria Turton(Authors)
  • 2014(Publication Date)
  • Wiley

    (Publisher)

  2 Economic Growth A nation is not made wealthy by the childish accumulation of shiny metals, but is enriched by the economic prosperity of its people. Adam Smith 1 Economic growth is the litmus test of modern national and global suc-cess. Lack of growth can topple governments, bankrupt states, jeopar-dise currencies, cause wars and create long-term structural and societal problems that create hardship for millions. Understanding how growth occurs, what jeopardises it, but, perhaps more importantly, how to sus-tain it, has become the Holy Grail of politicians. The universal, standard measure of a country’s economic growth is its gross domestic product (GDP). It is vital to understand what components make up this mea-sure and how they impact on wider society, to be able to analyse and understand their impact on financial markets. ECONOMIC GROWTH THROUGH THE AGES Figure 2.1 shows the world economy from 1 to 2008. The author esti-mates data for year 1 and then for year 1000, then 500 years later, and, after that, at 100-year intervals until 1800 when it becomes annual. Prior to 1500, figures are based on population trends, as there was very little productivity difference. This is not to say there was no divergence – there was – as better agricultural techniques, better access to land and water and so forth started to make a difference in some parts of the world, from around 1000. However, the real game changer was the Industrial Revolution, which altered everything, starting in Europe, but then quickly spreading around the world. And this process has not yet ended, as there is still catch-up occurring in some countries. There is still potential for big changes in GDP per head (per capita), as even a cursory glance at the chart will show. Japan and China have made remarkable progress in a short time, 1 Smith, Adam, An Inquiry into the Nature and Causes of the Wealth Of Nations (1776). http://www.econlib.org/library/Smith/smWN.html (accessed 12 April 2013).

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  Putting Green Growth at the Heart of Development

  • OECD(Author)
  • 2013(Publication Date)
  • OECD

    (Publisher)

  For instance, GDP can continue to grow for a time even as the resources upon which it depends are being depleted. In conventional approaches to economic growth, the value of environmental services, natural capital and pollution are not measured alongside other activities that are readily valued by markets (OECD, 2013). Indeed, the economist who established the definition of GDP clearly stated that it was never meant to be a measure of well-being (Kuznets, 1934). To capture the many other elements of Growth and Development, the OECD has joined other institutions in a cross-cutting international effort to develop indicators that are more inclusive of the environmental and social aspects of progress (Box 1.5). 1.4. Understanding developing country concerns about green growth The concept of green growth is generating a great diversity of political positions, ranging from enthusiastic to cautious. 2 Such views reflect variously a lack of clarity and limited experience, the different opportunities available to specific countries, and fears that international green growth policy regimes might put some countries at a disadvantage. There is generally a high degree of ambition and political support for green growth across the developing world, where it can be shown to lead to poverty reduction, higher social welfare and job creation. In addition, it must support the structural transformation of the economy to achieve higher productivity and more value-added products. Yet some developing countries are cautious about the concept and are only just beginning to assess the opportunities, threats and indeed meaning of greening their development pathways. Some of the policy ideas and technologies associated with green growth are neither easily accessible nor entirely relevant to their national development needs.

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  Advances In Development Economics

  • Dipak R Basu(Author)
  • 2008(Publication Date)
  • World Scientific

    (Publisher)

  It varies in the value from country to country according to the development stage and other economic The Sustained Growth and Its Relation to the Initial Conditions 11 and social conditions. (As I do not pretend to take the traditional neoclassical assumptions of perfect competitiveness to apply in the markets of actual Asian economies, I steer clear of mention that it represents the share of capital.) One of the essential efforts for developing economies to make take-off towards the sustained growth paths is admittedly the accumulation of knowledge in its broad sense. The knowledge includes general education for people as a fundamental con-dition necessary for a rise in quality of human capital and more specific vocational knowledge such as engineering and management techniques used in actual pro-duction activity. The acquisition of this knowledge is conducted through a variety of channels, but in the case of developing countries aiming to rapid catch-up to the level of advanced industrial countries, it is usually observed that governmental policies play an overwhelmingly important role for it. For the upgrading of the edu-cational standards of the general public, it is inevitable to implement sophisticated social policies including establishment of the comprehensive educational system in the nation, and for the acquisition of new technology, governmental industrial policies have a dominant influence over the behavior of individual firms through subsidizing imports of capital goods embodying new technology, encouraging tech-nology transfer in the form of licenses and foreign training, liberalizing capital movement to introduce direct foreign investment, financially supporting R&D activity, and so forth.

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