Factors of economic development

Economic Growth

  • Economic growth means an increase in real GDP. This increase in real GDP means there is an increase in the value of national output / national expenditure.
  • Economic growth is an important macro-economic objective because it enables increased living standards and helps create new jobs.

Measurement of Economic Growth

Economic growth is measured by changes in the gross domestic product (GDP). It measures a country’s entire economic output for the past year. That takes into account all goods and services that are produced in this country for sale, whether they are sold domestically or sold overseas. It only measures final production, so that the parts manufactured to make a product are not counted. Exports are counted because they are produced in this country. Imports are subtracted from economic growth. Economic growth is measured quarterly measured using real GDP to compensate for the effects of inflation. Here’s more on the GDP growth rate and how you can calculate it.

Measurements of economic growth do not include unpaid services. They include the care of one’s children, unpaid volunteer work, or illegal black-market activities.

Determinants of Economic Growth

  • Productivity.
  • Intensity (hours worked)
  • Demographic changes.
  • Political institutions, property rights, and rule of law.
  • Capital.
  • New products and services.
  • Growth phases and sector shares.

 

The Concept Of Economic Development

  • Economic development is the process by which a nation improves the economic, political, and social well-being of its people.

Differences between Economic Growth and Economic Development

  • Economic growth measures an increase in Real GDP (real output). GDP is a measure of the national income / national output and national expenditure. It basically measures the total volume of goods and services produced in an economy.

Economic Development looks at a wider range of statistics than just GDP per capita. Development is concerned with how people are actually affected. It looks at their actual living standards and the freedom they have to enjoy a good standard of living.

Elements/ Factors Contributing to Economic Development

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