ECONOMIC DEVELOPMENT AND PLANNING

Business studies study module

Economic Growth

This is the increase in the productivity of a country which can be seen in the continued increase in the national income over a period of years.

It can be measured taking the average percentage of increase in national income over a period of time (number of years) and be assumed to be the average rate of economic growth in the country

Economic Development

This is the quantitative change or increase in a country’s national income over the years, accompanied favorable changes in the structures within the country that leads to general improvement of the individual well being, as well as the entire nation

A country may experience economic growth without experiencing economic development. This is because the increase in the national income may be as a result of people working for long hours without any time for rest, recreation and other development to occur in their body. This will make them not to have better living, despite the fact that the national income shall have increased.

The expected structural changes to be realized in a case of economic development include;

  • Shifting from depending on agricultural sector to manufacturing sector in the economy
  • Reducing illiteracy levels
  • Increase in skilled manpower in the economy
  • Improvement in health facilities within the country
  • Increase in technology and improvement of entrepreneurial ability
  • Increase and improvement of institution that handles new methods of productive economic activities

Outline the differences that exist between economic growth and economic development

Economic Growth Economic Development
i)                  An increase in size of the country’s National income i)   An increase in the size and quality of the country’s National income
ii)               Number of people living in absolute poverty can increase despite the increase in national income ii) Number of people living in absolute poverty does not increase
iii)Increase in national income could be due to increase in income of only few people iii)            Increase in national income is attributed to general increase of incomes of majority of the people in the country
iv)            No tendency to bridge the gap between the rich and the poor iv)Tends to bridge the gap between the rich and the poor

 



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