INTRODUCTION 

Similar to seers and philosophers, economists, were also party to human’s quest for a better tomorrow. We have been a witness to a number of notional coming in from the literature of Economics in this area—starting with a very humble and layman’s word like ‘progress’ to technical terms like ‘growth’, ‘development’ and ‘human development’. With greater dependence on the idea of the ‘economic man’, the world created immense wealth in the post War decades. It was in the 1980s that social scientists started finer studies in the area of mankind’s actions, finally challenging the very idea of the ‘economic man’ (‘rational man’). Thus starts mankind’s urge to introspect the lives of humanity on the planet earth. Meanwhile, humanity was faced with an unique riddle of climate change. By now, courtesy the UNO, the world has the World Happiness Report.

PROGRESS

Progress is a general term frequently used by experts to denote betterment or improvement in anything. In economics, the term was used for a long time to show the positive movement in the lives of people and in an economy. It had both quantitative and qualitative aspects to it. After a point of time, some economists started using all the three terms—progress, growth and development—interchangeably to mean almost the same thing.

But it was only during the 1960s, 1970s and 1980s that a clear meanings of these terms really evolved. The term ‘progress’ became a general term with no specific meaning in economics or denoting both growth and development. But growth and development were allotted their clear-cut meanings.

 ECONOMIC GROWTH

A term coming from the life sciences, ‘growth’ in economics means economic growth. An increase in economic variables over a period of time is economic growth. The term can be used in an individual case or in the case of an economy or for the whole world. The most important aspect of growth is its quantifiability, i.e., one can measure it in absolute terms. All the units of measurement may be applied, depending upon the economic variable, where growth is being studied.

We have a few examples:

•  An economy might have been able to see growth in food production during a decade which could be measured in tonnes.

• The growth of road network in an economy might be measured for a decade or any period in miles or kilometres.

• Similarly, the value of the total production of an economy might be measured in currency terms which means the economy is growing.

• Per capita income for an economy might be measured in monetary terms over a period. We may say that economic growth is a quantitative progress.

To calculate the growth rate of an economic variable the difference between the concerned period is converted into percentage form. For example, if a dairy farm owner produced 100 litres of milk last month and 105 litres in the following month, his dairy has a growth rate of 5 per cent over a period of two months. Similarly, we may calculate the growth rate of an economy for any given successive periods. Growth rate is an annual concept which may be used otherwise with the clear reference to the period for which it is used. Though growth is a value neutral term, i.e., it might be positive or negative for an economy for a specific period, we generally use it in the positive sense. If economists say an economy is growing it means the economy is having a positive growth otherwise they use the term ‘negative growth’.

Economic growth is a widely used term in economics which is useful in not only national level economic analyses and policymaking, but also highly useful in the study of comparative economics. International level financial and commercial institutions go for policymaking and future financial planning on the basis of the growth rate data available for the economies of the world.

 ECONOMIC DEVELOPMENT 

For a comparatively longer period of time after the birth of economics, economists remained focused on aspects of expanding the quantity of production and income of a country’s economy.
The main issue economists discussed was—how to increase the quantity of production and income of a country or a nation-state. It was believed that once an economy is able to increase its production, its income will also increase and there will be an automatic betterment (quality increase) in the lives of the people of the economy. There was no conscious discussion over the issue of quality expansion in the lives of the people. Economic growth was considered as a cause and effect for the betterment of the lives of the people. This was the reason why economists, till the 1950s, failed to distinguish between growth and development, though they knew the difference between these terms.
It was during the 1960s and in the later decades that economists came across many countries where the growth was comparatively higher, but the quality of life was comparatively low. The time had come to define economic development differently from what the world meant by economic growth.

For economists, development indicates the quality of life in the economy, which might be seen in accordance with the availability of many variables such as:

• The level of nutrition

• The expansion and reach of healthcare facilities—hospitals, medicines, safe drinking water, vaccination, sanitation, etc

• The level of education

• Other variables on which the quality of life depends Here, one basic thing must be kept in mind that if the masses are to be guaranteed with a basic minimum level of quality-enhancing inputs (above-given variables such as food, health, education, etc.) in their life, a minimum level of income has to be guaranteed for them.

• Income is generated from productive activities. It means that before assuring development we need to assure growth. Higher economic development requires higher economic growth. But it does not mean that a higher economic growth automatically brings in higher economic development—a confusion the early economists failed to clarify. We may cite an example here to understand the confusion: two families having same levels of income, but spending differing amounts of money on developmental aspects. One might be giving little attention to health, education and going for saving, and the other might not be saving but taking possible care of the issues of health and education. Here the latter necessarily will have higher development in comparison to the former.

Thus, we may have some diverse cases of growth and development:

•  Higher growth and higher development

• Higher growth but lower development

•  Lower growth but higher development

The above-given combinations, though comparative in nature, make one thing clear, that, just as for higher income and growth we need conscious efforts, same is true about economic development and higher economic development.Without a conscious public policy, development has not been possible anywhere in the world. Similarly, we can say, that without growth there cannot be development either.

The first such instance of growth without development, which the economists saw, was in the Gulf countries. These economies, though they had far higher levels of income and growth, the levels of development were not of comparable levels. Here started the branch of economics which came to be be known as ‘development economics’. After the arrival of the WB and IMF, conscious economic policies were framed and prescribed for the growth and development of less developed economies. We can say that economic development is quantitative as well as qualitative progress in an economy. It means, when we use the term growth we mean quantitative progress and when we use the term development we mean quantitative as well as qualitative progress. If economic growth is suitably used for development, it comes back to accelerate the growth and ultimately greater and greater population brought under the arena of development.

Similarly, high growth with low development and ill-cared development finally results in fall in growth. Thus, there is a  circular relationship between growth and development. This circular relationship broke down when the Great Depression occurred. Once the concept of the ‘welfare state’ got established, development became a matter of high concern for the governments of the world, policymakers and economists alike. A whole new branch of economics—welfare economics has its origin in the concept of welfare state and the immediacy of development.   

Difference Between Economic Growth and Economic Development