Economic Growth And Economic Development_presentation

Economic Growth and Economic Development Subhalaxmi Mohapatra October 12, 2009

Coverage of the Presentation Growth Versus Development Economic growth Meaning Indicators

Development Meaning Indicators

Benefits of economic growth Costs of economic growth

Growth Versus Development

Economic Growth:

A measure of the value of output of goods and services over a period of time

Economic Development: A measure of the welfare of humans in a society

Economic growth may be one aspect of economic development but is not the same

Economic Growth Economic growth measures the level of income of a country – but it does not take into account the income distribution. Small section of the population can own a large proportion of the wealth in the country. The level of human welfare for the majority could therefore be limited.

Indicators of Economic Growth GDP The value of final goods and services produced within a country during a given period.

GNP The value of final goods and services produced within a country plus the net factor income from abroad.

GDP Per Capita or GNP per Capita Takes into account the size of the population

Real GDP / GNP Takes into account the adjustments for price changes and inflation.

Economic Development Development incorporates the notion of a measure or measures of human welfare. It is a normative concept – open to interpretation and subjectivity

Human Development Index A socio-economic measure Developed by the United Nations Development Program (UNDP) to analyze systematically and comprehensively the comparative status of socioeconomic development in different countries. Focuses on three dimension of human welfare: Longevity – life expectancy Knowledge – access to education, literacy rates Standard of living – GDP per capita, purchasing power parity

Measure of Human welfare Poverty Levels of poverty Absolute Relative

Inequality Sustainable development Proportion of activity in different sectors of the economy Primary Secondary Tertiary

Other Measures Number of doctors per head Disease indicators Economic activity per sector Stress levels Crime levels Health care data

Benefits of Economic Growth Increases in economic growth should enable more of everything to be produced. Increases possibility of providing consumer goods for all. More consumer goods could be equated with better standard of living. Wealth generated may trickle down to those who are poor by means of income distribution – through taxes and benefits, etc.

Benefits of Economic Growth Improved standard of living associated with increase in the availability of luxury goods In addition Infrastructure building like roads, rail, energy, communication network etc. Health and education provisioning

Costs of Economic Growth Not all income distributed equally and Wealth often in the hands of a few Trickle down of income not necessarily always work in practice Corruption may reduce redistribution effects Growth funded in part by spending in weapons which do not benefit the population as a whole.

Costs of Economic Growth Environmental problems Negative externalities Pollution – dumping of hazardous waste Environmental degradation – over farming reduces productivity of the soil, deforestation damage to eco-systems and reduction in biodiversity Non- renewable resources – finite resources

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