Question

Explain the relationship between economic growth and development. Be sure to define carefully what is economic growth and what is development. In what sense is economic growth thought to be necessary but not sufficient for development? Discuss how Amartya Sen’s idea of development as freedom differs from traditional understanding of development as increase in standard of living?

Answer 1

Economic growth caters to the increase in output and productivity in a nation where resources are allocated in order to produce as much output as possible. While economic development is an increase in real national income. With an increase in economic growth, one expects to have economic development.

Thus in essence economic growth is defined as a quantitative change and measures gross domestic product of an economy. On the other hand economic development is a qualitative aspect which emphasizes on an increase in income and distribution of income so that there is equity in resources and overall increase in standard of living.

Economic growth is necessary for economic development, wherein there needs to be an increase in productivity in order to help the economy grow which increases the income level and eventually increases the standard of living. But economic growth is not sufficient for development because just based on an increase in output, a country can't develop, there needs to be other factors in place such as focus on healthcare, education, life expectancy which needs to prevalent along with economic growth, only then will there be economic development. With just economic growth, a country can't prosper in terms of economic development.

Traditional understanding of economic development is that there is efficient allocation of goods and services, which increases standard of living. On the other hand, Amartya Sen's idea of development was defined as the ability of people to freely participate in a community, to have access to resources and opportunities in life and not just an increase in income.