“The tree has had a good growth and now fruitful. It increased the turnover of the farm. But not the allowances of the gardeners. The growth of the crop impacted not everybody’s quality of living.” This story is very much closer to the difference between Economic Growth and Economic Development. As you know, according to the basics of economics, economic growth means the increase in the total output. But, economic development of a country needs many more facts to get satisfied.

This article brings you the following topics

  1. What is an Economic Development?
  2. Previously used Economic Development Measures and their Loopholes
    • National Income (NI)  
    • Economic Welfare
    • Occupational Patterns
    • Consumption patterns
  3. How to assure the Economic Development of a Country for real?
  4. Sustainability and Economic Development of a Country

1.What is an Economic Development?

There are three facts that pillar the Economic Development of a nation.

  • Living : the mode of survival and the usual presence.
  • Self-esteem : the level of confidence about the individual capabilities.
  • Freedom : the accessibility for a quality human life without discrimination.

The achievement of the above three facts guarantees the economic development. In other words, efforts on economic development supports the individual capabilities to boost these three. Ultimately, economic development improves the quality of human life.

Moreover, a nation focuses on four devices with this regard. Namely, a nation concerns economic, social, political, and institutional devices to increase quality of human life. There, it considers both the public sector and the private sector. Further, a nation needs an institutional transformation on those four. Accordingly, the following results should appear.

  • Arriving to growth from stagnation.
  • Arriving to a higher income from low income level,
  • Overcoming the absolute poverty.

You just recall the farm we discussed at beginning. Accordingly, you can clear the difference between economic growth and economic development as follows.

ECONOMIC GROWTH is like the tree becoming fruitful. It increased the output. But only one party or few owned the crop. In other words, the owner, or the management. Consequently, the majority (the gardeners) received nothing special than the usual wage. Therefore, the  inequality remains. The increased crop alone does not contribute everybody’s quality of living.

Accordingly, an economic development is not seen here, even an economic growth occurred.

But ECONOMIC DEVELOPMENT contributes to heal social facts. In essence, economic development reduces the poverty of a nation. Also, economic development provides employment opportunities. With this regard, sustainability plays a vital role. In other words, economic development ensures future generation’s ability to satisfy their necessities well enough. On the other hand, it does not delimit your access too. So, these facts should necessarily be there to ensure an economic development.

Let’s get our example again. Accordingly, an economic development is not seen there, even an economic growth occurred. The rich crop did not solve poverty. Neither it provided employment opportunities. Hence, problems such as unemployment was not been healed by this increased crop. Also, it did not provide a guarantee about future harvest. Thus, it does not contribute for the sustainability. However, it increased the total output. So, you can call it a growth. But not a development.

In conclusion, an increase in the total output brings the economic growth. But not an Economic Development. Because, the Economic Development of a country means lot more than economic growth.

Hope the above clarifies the difference between Economic Growth and Economic Development. Now let’s go through previously used measures of Economic Development.

2.Previously used Economic Development Measures and Their Loopholes

Previously used Economic Development Measures
Previously used Economic Development Measures

National Income (NI) and the Economic Development of a Country

Traditionally, Economic Development was counted upon the transfer of resources from agricultural activities to industrial activities. The industrial revolution originated this belief. Accordingly, many countries dreamt to increase their NI by boosting the industrial sector. Therefore, in here, just a growth in the production took place. But you can understand that it is not the development. Because, we concluded the difference between the Growth and the Development.

Now let’s pay attention to the drawbacks of NI as an indicator of economic development of a country.

The composition of the national income is ignored.

For an example, imagine the NI includes unhealthy products. Then, it harms the health of the citizens. Therefore, it worsens the quality of living. Hence, it doesn’t count a development.

NI increases during war periods.

When there is war, it increases the production of weapons. Further, it paves damage reimbursements. These transactions increase the NI. But a war situation never increases the quality of human life.

Environmental Impact is not concerned.

Imagine the industries doubled their production across eco unfriendly activities. Consequently, in the long run, it brings many hazards. Therefore, it is not a fact of development.

Reliability issues of the data.

Most of the times, the authorities manipulate data. Because they need to bubble their performance. Or else, to avoid taxes. Hence, you can’t keep a crystal-clear faith on data.

By considering the above facts, we can conclude that NI is not fit enough as an indicator. Now let’s see whether Economic Welfare measures the Economic Development of a Country correctly.

Economic Welfare and the Economic Development of a Country

First you should know that economic welfare focuses on living standards and equality. Therefore, this has a high possibility for a fair income distribution. Further, economic welfare attempts to distribute the national income fairly amongthe citizens. Likewise, it increases individual capabilities to fulfil the needs and wants.

Now you could see that economic welfare method is way better than the NI indicator. Because, economic welfare considers the household facts. For example, real household spending, median household income, household net wealth etc.

Accordingly, when “household facts” are taken into consideration, individual capabilities are concerned. Therefore, this is a much closer indicator of the economic development of a country.

Yet, I suggest economic welfare is not the best indicator of the economic development of a country. You know why? The fair distribution of income is calculated by using the national income. Hence, the welfare method carries some of the drawbacks of NI method. In essence, just check below.

  • War conditions are not adjusted.
  • Content of the National Output is not investigated.
  • Environmental impacts are not concerned.

Therefore, let’s conclude that Economic Welfare is neither the best indicator. Come, let’s go through some other alternatives.

Occupational Patterns and the Economic Development of a Country

As you know, the economic composition gets divided in to the three main categories. They are, agriculture, industrial and services sectors. You should carefully understand one thing. It is a myth to assume that a higher proportionate on agricultural sector lessens the economic development. Or, a higher proportionate on industrial sector, increases the development. Even, so many do believe it.

The country’s strong zone decides the economic development. That strong zone differs one country to another. For an example, the countries with good fertile lands could achieve a development when agricultural industry is boosted well. But it will not work for countries that do not have fertile lands. Such countries should focus on industrial sector. Or else, on service sector.

But you might have seen that many countries get this decision following the trends. In fact, agriculturally capable countries give up farming to move towards industries. But it brings negative returns for them. Therefore, occupational patterns are not a general indicator to measure the economic development of a country. Because, it depends on the country’s strong zone.

Hence, let’s mark it as rejected. Now you are done with occupational patterns. Let’s consider the consumption patterns.

Consumption patterns and the Economic Development of a Country

You might assume that increased consumption rates indicate the affordability of the citizens. And, it means that citizens get their needs and wants satisfied safely. Likewise, majority thinks that it increases the quality of human life. But sorry! The real situation is different.

You know that income brings up two uses. Either to consume or to save. Therefore, an increase in the consumption reduces savings. Savings provide the main source for investments. On the other hand, investments provide the life blood for the economy. Therefore, an increased consumption lessens the savings. Consequently, it restricts investments. Ultimately this weakens the economy. Because, the investments are declined.

Accordingly, you can see increased consumption patterns indicate a quality civil life. But the joy is temporary. Therefore, the economic development of a country and the increased consumption patterns are faraway than appear.

As a result, we could conclude that every tool has considerable loopholes. Then what will be the correct indicator of the economic development of country? Come! Let’s consider the below facts.

Then how to assure the true economic development of a country?

how to assure the true economic development of a country
how to assure the true economic development of a country

If an economic mechanism contributes to

  • reduce the level of poverty,
  • reduce the level of unemployment,
  • and reduce the level of inequality

such an economic mechanism brings the economic development of a country.

In brief, if the three facts of poverty, unemployment and inequality are reduced in high scale, an economic development is possible for that nation. If at least two of these facts are growing, there can’t be seen a development. Not even when there is a growth in the per capita.

Accordingly, the economic development of a country is all about the quality of the lifestyle of its citizens.

There are few indicators to measure this quality living. Such indicators are majorly two toned.

  • Single Indicators (Health Measures such as life expectancy, infant mortality etc. and Educational Measures such as adult literacy rate, enrollment for primary education etc.)
  • Composite Indicators (Physical Quality of life index, Human Development Index, Gender Development Index, Human Poverty Index)

Hope you got a satisfying answer for “what does economic development of a country means?”.  Also, I believe you got cleared what indicators suit for the most to measure this. But still, our discussion is not complete. Because, you simply can’t skip “sustainability” when talking about economic development of a country.

“Sustainability” and “Economic Development of a Country”

Sustainability assures the wellbeing of the future generations as well, whilst the wellbeing of the present generation is guaranteed. Accordingly, it assures a quality life for both the present and future generations.

Therefore, sustainable motives assure the economic development of a country.

However, you need to keep remember one thing. Sustainability is an advance concept with compared to the economic development.


In conclusion, the quality of human life decides the economic development of a country. Numerous indicators are present to measure it. But the majority are product oriented. But now you know “development” is far away than the output. Because, the economic development of a country is not a synonym to the economic growth of a country. Accordingly, the best way to measure the economic development of a country is to focus on reducing the poverty, unemployment, and inequality. Moreover, sustainable motives positively impact towards the development is ensured.

More articles about economics

Write A Comment