Question

What are the differences between economic growth and economic development? Give examples of a Latin American country with a high level of growth, but little economic development, and one country with higher levels of development than growth, and be sure to define and use indicators such as GNP per capita and the HDI.

Answer 1

Obviously, sustained economic growth typically implies economic development, but most development economists nevertheless use the two terms differently. Economic growth typically refers to an increase in gross domestic product (GDP), while economic development typically refers to a structural transformation, mostly of the economy.

The auxiliary change alludes to an adjustment in the sythesis of GDP. At first, financial exercises and occupations are situated in the agrarian area. With improvement, the portion of agribusiness in GDP diminishes as financial exercises and occupations move towards the modern division, particularly fabricating. After certain times of industrialization, the administration division will gradually overwhelm the portion of industry, while the portion of farming keeps on diminishing. At the end of the day, at the last phase of advancement, we ordinarily have an economy wherein individuals gain their occupation overwhelmingly from the administration area a still significant yet lessened industry part.

The segment progress is resolved generally by changes in the fertility rates and changes in life expectancy. At first, fertility rates are high, yet because of moderately high passing rates , populace development is restricted. In the following stage, both richness rates and life expectancy are expanding, causing a sharp increment in the size of populace. With ceaseless turn of events, life expectancy keeps on expanding, yet strongly declining fertility rates will restrict populace development.

The principle factors prompting the cycle of urbanization is the relocation of individuals from country zones looking for occupations in the rising metropolitan habitats, the change of initially semi-metropolitan rural areas into completely metropolitan focuses, and contrasts in populace elements among rustic and metropolitan regions.

Economic growth is the most powerful instrument for reducing poverty and improving the quality of life in developing countries. Both cross-country research and country case studies provide overwhelming evidence that rapid and sustained growth is critical to making faster progress towards the Millennium Development Goals – and not just the
first goal of halving the global proportion of people living on less than $1 a day.

Growth can generate virtuous circles of prosperity and opportunity. Strong growth and employment opportunities improve incentives for parents to invest in their children’s education by sending them to school. This may lead to the emergence of a strong and growing group of entrepreneurs, which should generate pressure for improved
governance. Strong economic growth therefore advances human development, which, in turn, promotes economic growth.

But under different conditions, similar rates of growth can have very different effects on poverty, the employment prospects of the poor and broader indicators of human development. The extent to which growth reduces poverty depends on the degree to which the poor participate in the growth process and share in its proceeds. Thus, both
the pace and pattern of growth matter for reducing poverty.

Economic growth generates job opportunities and hence stronger demand for labour, the main and often the sole asset of the poor. In turn, increasing employment has been crucial in delivering higher growth. Strong growth in the global economy over the past 10 years means that the majority of the world’s working-age population is now in
employment.

it is also important to note here that the 1990 human development report of the UNDP came in at a very significant juncture of the world economy. It came at a time when the World Bank and the Bretton Woods institutions comprising the IMF along with the World Bank has started prescribing structural adjustment policies and programs for various countries across Africa, Asia and Latin America. Latin American countries were reeling under a debt crisis. There was a clear disconnection with respect to economic growth and human development achievements in many countries across the world.

Experimental proof proposes that globalization has fundamentally helped monetary development in East Asian economies for example, Hong Kong (China), the Republic of Korea, and Singapore. Be that as it may not all creating nations are similarly occupied with globalization or in a position to profit by it. Indeed, aside from most nations in East Asia and some in Latin America, creating nations have been somewhat delayed to coordinate with the world economy. The portion of Sub Saharan Africa in world exchange has declined constantly since the late 1960s, and the portion of significant oil exporters fell forcefully with the drop in oil costs in the mid 1980s. In addition, for nations that are effectively occupied with globalization, the advantages accompany new dangers and difficulties.

Progress towards poverty reduction has slowed in recent years, reflecting the weak growth in per capita incomes in many regions (United Nations, 2019a). Close to 10 per cent of the world population continues to live below the extreme poverty line of $1.90 per day. A number of countries, notably commodity exporters, have even experienced setbacks in poverty reduction in recent years. The number of people living in extreme poverty has risen in several sub-Saharan African countries, where poverty levels are already very high. Poverty rates have also edged up in parts of Latin America and the Caribbean and Western Asia.

As per capita income growth is expected to remain weak in many countries, poverty eradication will increasingly rely on efforts to address high levels of inequality. Ensuring an adequate standard of living for all inhabitants of a country depends critically on how income is distributed across the population. Even in a country where the average level of income is high relative to the extreme poverty threshold of $1.90 per day, poverty may be pervasive if income is very unequally distributed. In fact, over half of the world’s extreme poor live in middle-income countries, with India and Nigeria together accounting for roughly one third of the extreme poor.

Latin America and the Caribbean is going through a drawn out monetary droop that is sabotaging progress towards the Sustainable Development Goals. In the midst of testing outer conditions, increased strategy vulnerability and nation explicit headwinds, the locale's Gross domestic product developed by just 0.1 percent in 2019, down from 0.9 percent the earlier year. The log jam was expansive based across subregions, and development in the locale's biggest economies (Argentina, Brazil and Mexico) was a lot more vulnerable than anticipated. A moderate and lopsided recuperation is extended throughout the following two years, with provincial development averaging 1.3 percent in 2020 and 2.0 percent in 2021.

Homegrown interest will probably be upheld by more accommodative money related approach and moderate inflationary weights. Purchaser and business supposition are relied upon to improve bit by bit in numerous nations, including Brazil and Mexico. What's more, sudden changes in speculator estimation could trigger recharged monetary instability furthermore, huge capital outpourings. On the homegrown front, strategy vulnerability, political disturbance and social agitation take steps to burden development in a few economies. As a rule, these difficulties are exacerbated by an absence of monetary approach space as Governments keep on hooking with sizeable public deficiencies and raised obligation troubles.

Pounded by mounting interior and outer headwinds, financial conditions over the district have decayed fundamentally over the previous year. Gross domestic product development in 2019 was more slow than anticipated in 24 out of 27 nations, and in 14 nations, including Argentina, Brazil also, Mexico, per capita GDP almost deteriorated or declined. Since the finish of the commodity boom in 2013/14, the locale has neglected to accomplish important financial development. Normal per capita GDP today is almost 4 percent beneath the 2014 level.8 simultaneously, progress in lessening imbalance seems to have eased back. Standard proportions of salary imbalance, for example, the Gini or Theil file, have demonstrated little improvement since 2014 . With not many exemptions, levels of imbalance over the area stay high, and huge portions of society need financial chance.