20+ Differences Between Economic Growth And Economic Development (Explained)

There is a misconception that the terms economic growth and economic development imply the same thing. But it is significant to recognize that although these concepts seem to be similar to some extent, in reality, economic development is a broader concept. 

Analyzing the two terms will give you a better picture of how economic growth and development work and how they differ. 

Comparison Between Economic Growth And Economic Development

ParametersEconomic GrowthEconomic Development
ExplanationIt focuses on increasing the production of goods and services in the country. It focuses on increasing people’s living standards.
Anticipated Changes Economic growth anticipates changes in the quantitative aspects of the economy.Economic development anticipates changes in the socio-economic aspects.
ScopeIt is a concept that is relatively narrow.Economic development is a wide concept.
MeasurementEconomic growth is measured in terms of GDP, GNP, and per capita income.Economic development is measured in terms of HDI and other metrics denoting the quality of life. 
Ways to GenerateIt can be generated by growing the labor force and increasing its productivity. It can be generated by focusing on human welfare dimensions along with economic growth.
EffectsIt increases income and employment levels but harms the environment and increases inequalities. Economic development reduces poverty, and inequalities, and improves the standard of living.
Time PeriodIt is a short-term process.It is a long-term process.


Economic Growth VS Economic Development

Economic Growth

1. It is a single-dimensional process.

2. The concept is relatively narrow.

3. Indicators include GDP, GNP, and per capita income.

4. It is more suitable for developed nations.

Economic Development

1. It is a multi-dimensional process.

2. The concept is broad.

3. Indicators include HDI and other healthcare, literacy, and inequality metrics.

4. It is more suitable for underdeveloped and developing nations.

Explanation Of Economic Growth And Economic Development

What Is Economic Growth?

The term ‘economic growth refers to the increase in the real output of a nation. Here real output means the total quantity of goods and services produced in an economy over a certain period, adjusted for inflation.

However, economic growth is a limited concept because it focuses primarily on quantitative aspects.

What Is Economic Development?

Economic development is a broad concept that incorporates both quantitative as well as qualitative facets. It aims to achieve the all-around development of a nation. It includes not only the growth in the economic dimension but also improvement in the social and political dimensions.

By focussing on various aspects, economic development aims to enhance people’s standard of living.

Contrast Between Economic Growth And Economic Development

Anticipated Changes

  • Economic growth- It anticipates only quantitative changes in the real output of a nation.
  • Economic development- To achieve economic development, changes in two dimensions: quantitative and qualitative, are essential. These include changes in income, other socio-economic changes, and the betterment of the quality of life. 


  • Economic growth – Economic growth is limited in scope.
  • Economic development – The scope of economic development is broad.


  • Economic growth – The metrics used to estimate economic growth are real GDP (Gross Domestic Product), GNP (Gross National Product), or per capita income.
  • Economic development – Economic development is evaluated in terms of HDI (Human Development Index) and other measures that analyze inequalities, literacy levels, poverty, and healthcare conditions.

Ways to Generate

  • Economic growth – Economic growth can be spurred by increasing the labor force and enhancing productivity. The labor force’s productivity can be boosted by educating and training them, introducing technological improvements, and investing in capital goods. 
  • Economic development – Apart from raising the labor force’s productivity, to bring about economic development, working on boosting literacy levels, reducing inequalities, improving environmental conditions, and other structural changes to raise the quality of life is necessary.


Ways to generate- economic growth vs. economic development

Spurring Economic Growth

1. Improving the productivity of labor.

2. Raising the capital goods in the economy.

3. Technological advancements.

4. Focussing on boosting human capital.

5. Increasing the labor force.

Generating Economic Development

1. Enhancing labor productivity

2. Improving literacy levels.

3. Decreasing inequalities.

4. Conserving the environment.

5. Focussing on improving the quality of life.


  • Economic growth- Economic growth leads to higher income levels, lower unemployment, and improvements in other quantitative dimensions. However, some serious negative effects of economic growth include increased inequalities and environmental degradation.
  • Economic development- When economic growth is accompanied by human welfare, it results in poverty reduction, improvement in education, healthcare, and other factors which are significant to leading better lives.

Time Period

  • Economic growth– Economic growth is a short-term process. It takes place for a certain period.
  • Economic development- Economic development is a long-term process. It is a continuous process. 

Relevant Countries

  • Economic growth- The concept of economic growth is suitable for developed nations. 
  • Economic development- Economic development is more suitable for underdeveloped and developing countries.

FAQs (Frequently Asked Questions)

1. How is economic growth related to development?

Economic growth is the means of development. To bring about economic development, working towards economic growth is necessary.

2. What are the four factors of economic growth?

The four factors of economic growth are labor, capital, land, and entrepreneurship.

3. How does economic growth affect the environment?

Economic growth harms the environment. It leads to overconsumption of non-renewable resources, results in their depletion, causes global warming, and increases pollution.

4. Why is economic development essential?

Economic development is the key to enabling people to lead better lives. It helps in the equitable distribution of resources and allows everyone to get access to the opportunities generated.

5. What is an economic development plan?

To step forward and achieve economic development, nations devise programs and policies.

These strategically developed frameworks aimed to boost the quality of life of people are known as economic development plans.

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