Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Economic Growth is defined as an increase in a country's real level of national output
which can be caused by an increase in the quality of resources (education), increase in the
quantity of resources and improvements in technology or in another way an increase in the value
of goods and services produced by every sector of the economy. According to Prof. Mehta, the
term "growth" has quantitative significance. He further suggested that growth suggests an
increase in the quantity or volume of something”. An example of economic growth: an economy
that has a GDP growth rate of 4% and a population growth rate of 2% would have a per capita
GDP growth rate of 2%.
Economic development is the increase of per capita income (aggregate increase in output
of goods and services). According to Michael Todaro “economic development is an increase in
living standards, improvement in self-esteem needs and freedom from oppression as well as a
greater choice.” He further suggested the most accurate method of measuring development is the
Human Development Index which takes into account the literacy rates and life expectancy which
affects productivity and could lead to Economic Growth. It leads to the creation of more
opportunities in education, healthcare, employment and the conservation of the environment. It
implies an increase in the per capita income of every citizen. Todaro further want on to say
“development must, therefore, be conceived of as a multi-dimensional process involving major
changes in social structures, popular attitudes and national institutions, as well as the acceleration
of economic growth, the reduction of inequality and the eradication of poverty”. Examples of
economic development are healthcare services provided by The Queen Elizabeth Hospital and
Transportation services provided by the Transport Board.
Furthermore economic growth and development are not the same. The major differences
are economic growth is a measurement of Gross Domestic Product, not sufficient condition of
economic development, does not take into account the size of the informal economy also known
as the black economy which is unrecorded economic activity, does not take into account the
depletion of natural resources which might lead to pollution, congestion and disease whereas
economic development is a measurement of economic development, multidiscipline process of
transformation, improves the standards of living, necessary for economic growth and is
concerned with sustainability (meeting the needs of the present without compromising future
needs).
The market mechanism is the process by which a market solves a problem of allocating
resources, especially that of deciding how much of a good or service should be produced, but
other such problems as well. The market mechanism is a choice, for example, to having such
decisions made by government.
