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Economic Growth vs Development


Definitions of development

Economic Indicator

Ever since we have started to make sense out of things or gain a conscious mind to reach to conclusions, we have complicated everything. Yes, we have. Whatever can’t be put into a box, we call it an exception. This obsession of ours to simplify everything in just one word or number has caused us more trouble than good. It has. It’s the same thing we did with the multi-faceted concept of development. We tried to measure development with just one term. One economic indicator only for the complex process of development. The term being, “Gross Domestic Product” or GDP.

Development: a multi-faceted concept

We need to understand that development is a concept that is very subjective. Different people will have different meanings of development. A person living on streets can have a different meaning of development. It can mean having a home for him. For a rich businessman, development is the expansion of his business. For a woman working at late office hours, security and safety is development for her. Likewise, the term ‘development’ has political connotations as well. Its meanings are denoted by the context in which it is used. It can also refer to the varieties of agendas held by different people or organizations. For example, the idea of development by World Bank is different from that of Greenpeace activists.

With that in respect, development as a concept cannot be demarcated within the boundaries of economic growth, of which GDP is one of the clear indicators. Development encompasses not only economic aspect but also the aspects of political, social and cultural growth. Development is a broad, progressive movement which is synonymous with growth, modernization, self-reliance and social change.

Problems with GDP and related concepts

Development has been defined in terms of a nation’s economic prosperity. Since years, we were using GDP to rank a nation’s development. In fact, to a layman, the term ‘development’ and ‘growth’ are synonymous to each other.  Now as mentioned earlier, that GDP alone cannot be a wholesome indicator of development because it poses its problems. Some of them being that GDP and its related concepts do not include the unorganized sector. Though that sector amounts to be a major source of economy for poor, it isn’t counted.  Now because GDP has a specific formula that dictates the economic growth of a country, there is no consideration of how output helps in increase in quality of lives.

Economic Development vs Growth

GDP may take economic perspective into account but completely turns a blind eye to the other social and cultural factors, which in itself is a problem. Economic growth as an idea to measure development is a narrative has been propagated by the advocates of capitalism who dictate how capitalism should work. It’s the same problem with Gross National Income.


The fact that a person’s development depends upon many factors, the environment is one of them, makes the environment an important factor to measure development. Healthcare, living standards, sanitation. Given that any economy uses resources from the environment to turn them into usable goods and provide services, the environment should be taken into account but that is far from reality. So, GDP fails to gauge the quality of the environment.

Economic Indicators prove to be a failure when it comes to proving a nation developed or underdeveloped. One of the examples being Brazil. Brazil was a nation with the highest growth rate in Latin America during the 60s and 80s. The government spent much lower income on social factors such as health and education because of which Brazil is one of the nation with the highest amount of inequalities.

Deciding the kind of policies and regulations to affect and alter the process of development is in the governments’ hands. However, it must be realized that participatory form of decision making, policy formulation and implementation is the best way to promulgate the concept and foster development in its true sense.

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