Question

Economic growth is a necessary but not a sufficient condition for economic development? Do you agree or disagree? Explain your answer with reference to relevant evidence and theories.[15 marks]

Answer 1

Yes, I agree with the statement. economic growth is indeed necessary for economic development. Economic development is much a wider term and involves improving the welfare of the people - economic, social, and political. It is still important to realize that we live in a world where transactions happen through money and in the quoted prices. The economic welfare of people can not be improved if the value of money they hold is not increasing. Since economic growth is the measure of an increase in income with the people, it is necessary for any economic welfare. Even political welfare can depend on growth as it has been seen that high growth countries are usually democracies that improve political welfare. There is speculation that in China, as people's economic needs are satisfied and almost saturated at some point, the desire of people will move from economic gain to political gain and they will start demanding complete democracy.

But in no way is economic growth sufficient for development. Groth can happen even if the incomes only the top earners is increasing which creates a perception that an average citizen is well off. This is the case in US for example, where the share of the top 1% in the economic pi ahs increase tremendously in the last 3 decades while the real wages have remained constant since 1985. This does not make it clear if the average worker in US is living a better life as inequality is rampant. Economic hierarchy can often create social hierarchies, especially in developing countries like India, and those who were only economically worse off have to fight for their position in society. All in all, economic gorwth is a good, but we need lot more to develop people.