Economic growth is the process by which the national income or output of a country or nation increases over a period of time. This implies a sustained increase in the actual output of goods and services, while Economic development occurs when there are sustainable quantitative and qualitative improvements in almost all the sectors of an economy.
This implies that the positive change which takes place improves the general well-being of the people and ensures a sustained rise in the standard of living of the masses. It involves changes in the organisation of the economy which has to do with the emphasis on developing industries such as agriculture, mobility of labour from the village to cities, boosting locally made goods than importing goods, and establishment of favourable political environment.
Distinction between Economic Growth and Economic Development
Economic growth is not the same thing as economic development although it has been used interchangeable. However there are major differences between the two
| S/N | Economic Growth | Economic Development |
| 1 | This involves the increase in the quantity of goods and services produced in a country which raises national income | It involves the maturing of the quality and quantity of goods and services produced in a country which increases the welfare of the citizens. |
| 2. | Economic growth can occur in a nation without economic development | Economic development cannot take place without economic growth because growth is a major step to development |
| 3. | Economic growth is only about steps to improve the national output which only increases the income of the country | Economic development brings about a structural transformation in the different sectors of the economy as well as a general improvement in the economic activities of the country |
| 4. | A high rate of economic growth does not necessarily imply better welfare for the masses | A high rate of economic development is sure to improve the welfare of the masses drastically |
| 5. | Economic growth is about increase in output and little or nothing to do with improved welfare | Economic development is about the improvement of the welfare of the masses through equitable distribution of goods and services between individuals |
| 6. | Economic growth can take place under condition of mass unemployment | Economic development implies a drastic reduction in the level of unemployment |
It is important to note that countries of the world are mainly categorized into three groups based on the state of their economics. They are the first, second, and third world countries.
Those classified as first world are mostly the capitalized economically advanced countries like Britain, France, Germany, USA, Japan etc. They are seen as development nations while the second world or nations are mostly the socialist economically advanced countries like Poland, Crech republic, Hungary etc.
And the third world countries or under-developed nations are those that are referred to as economically backward or developing countries, they include countries in Africa like Rwanda, Somalia, Cameroon, etc, some countries in the Middle East and Latin American
Determinants of Economic Growth
1. The attitude of the societyThe term society is derived from the Latin word 'socius' meaning friendship or companionship. Society is a community, nation or group of people who share the same traditions, institutions, rules and... More towards saving and investment will affect the resources to ensure growth
2. The natural resources of the country will influence the economy of a country
3. The method and techniques of the institution determine the growth process of a country
4. The efficiency of resources utilization also affect the country growth
5. The allocation and distribution of resources influence the economic growth
6. The quality and quantity of capital available in a country is a major determinant
7. The effort of the working population
8. The level of technology
9. If the marginal rate of saving is above the average rate of investment, the consumption level will be affected.
10. The structural factor of the country determines the economy growth of the country.
Features of Under-Development
1. Low Agricultural productivity
2. In developing countries birth and death rate are very high which lead to population explosion
3. The income per head is very low
4. Low standard of living
5. The low level of saving and investment
6. High rate of illiteracy: The percentage of people that can conveniently read and write are very low in developing countries.
7. High level of corruption
8. High rate of importation: Most of the developing nations are dumping grounds for imported goods
9. Low rate of exports
10. Low rate of economic growth
11. Low level of technology and manpower development: The tools developed decades ago are still in use in developing countries e.g hoes and cutlass for farming
12. Poor infrastructural facilities
Factors that Influence Economic Development
1. Diversification of the economy: A diversified economy is possible through a balanced growth of the various sectors and the reduced reliance on a single product. E.g. Nigeria can diversify by investing more in agriculture and other sectors rather than depending on the sale of crude oil alone.
2. Removal of administrative bottleneck which hinder economic development i.e. unnecessary protocols must not be met before the approval to carry out researches and other important functions
3. Political Stability: The creation of a more stable political climate ensures efforts directed at projects implementation which are necessary for economic development
4. Availability of capital: Provision of capital through the establishment of financial institutions or ensuring that existing financial institutions such as Agric Development Bank of Nigeria, Industrial Development Bank, etc. are able to provide loans for intending or existing investors
5. Provision of infrastructure: The availability of standard economic and social infrastructural facilities such as electricity transportation networks and water supply
6. Provision of technical advice to private investors: A training institution or some form of training exercise aimed at equipping intending or existing investors on any planned investment venture
7. Government intervention: Direct investment in productive ventures by the government to supplement private efforts either in the form of joint enterprises or wholly government-owned concerns
Evaluation Questions
1. What are the major constraints to economic development of Nigeria
2. Examine the main features of developing countries
View Answer
Responses