ECONOMIC GROWTH AND ECONOMIC DEVELOPMENT

ECONOMIC GROWTH AND ECONOMIC DEVELOPMENT

Economic growth is a process of continuous increase in the real national income over a long period of time. National income is the market value of all final goods and services produced in a country during a year.

Market value refers to the price at which goods and services are sold in the market. It is given by the product P × Q. Final goods and services and those goods and services that are out of production process and are ready for use by the consumers. National income calculated at base year prices is called the national income at constant prices or the real national income.

The real national income prices are constant and are not allow to change. This helps us compare the increase in the output produced.

We can say that economic growth is a continuous increase in the real or per-capita income. An increase in real national income implies an increase in real output. Per-capita real national income equals to real national income or total population.

Economic development

It focuses in the changes in economic factors and it takes into account of the changes in many non-economic factors and promotes economic growth.

The following are the changes of economic development.

1.      Change in the output structure

The percentage share of non-agriculture sectors in national output increases and that of the agriculture sector decreases.

2.      Change in the occupational structure

The population engaged in the agriculture decreases while it increases in the non-agricultural sector.

3.      Change in the institutional structure

With the economic development facilities available for health, education, sanitation, communication, etc improve and even with the introduction of new technology in production process.