CHAPTER 14
INTRODUCTION TO ECONOMIC DEVELOPMENT AND PLANNING
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 by 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 by 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;
1. Shifting from depending on agricultural sector to manufacturing sector in the economy
2. Reducing illiteracy levels
3. Increase in skilled manpower in the economy
4. Improvement in health facilities within the country
5. Increase in technology and improvement of entrepreneurial ability
6. Increase and improvement of institution that handles new methods of productive economic activities
Economic development is a process where there is improvement in the lives of all people in the country. This
involves not only living standards, such as greater availability of goods and services (and also the ability to purchase
them) but also the promotion of attributes such as self-esteem, dignity and respect, and the enlarging of people's
freedom to choose and to take control of their own lives. While a country may grow richer therefore, through the
growth of its real output, it does not necessarily mean that it will develop.
In the economic study of the public sector, economic and social development is the process by which the economic
well-being and quality of life of a nation, region, or local community are improved according to targeted goals and
objectives.
Whereas economic development is a policy intervention aiming to improve the well-being of people, economic
growth is a phenomenon of market productivity and increases in GDP;
Economic development implies economic growth plus progressive changes in certain important variables which
determine well-being of the people, such as, health and education.
Sustainability is the ability of the environment to survive its use for economic activity.
The development of a country has been associated with different concepts but generally encompasses economic
growth through higher productivity, political systems that represent as accurately as possible the preferences of its
citizens, the extension of rights to all social groups and the opportunities to get them and the proper functionality of
institutions and organizations that are able to attend more technically and logistically complex tasks such as raise
taxes and deliver public services. These processes describe the State's capabilities to manage its economy, polity,
society and public administration. Generally, economic development policies attempt to solve issues in these topics.
Economic growth deals with an increase in the level of output, but economic development is related to an increase in
output coupled with improvement in the social and political welfare of people within a country. Therefore, economic
development encompasses both growth and welfare values.
The policies of economic development encompass two major areas:
Governments undertaking to meet broad economic objectives such as price stability, high employment, and
sustainable growth. Such efforts include monetary and fiscal policies, regulation of financial institutions, trade,
and tax policies.
Programs that provide infrastructure and services such as highways, parks, affordable housing, crime
prevention.
Job creation and retention through specific efforts in business finance, marketing, neighborhood
development, workforce development, small business development, business retention and expansion,
technology transfer, and real estate development.
ECONOMICS CHAPTER 14 ECONOMIC GROWTH AND DEVELOPMENT NOTES PREPARED BY MR. ANTONY AMBIA Page 1
, Measures of Economic Development
i. Economic development occurs when national income rises and the change in national income indicates the
rate of growth
ii. A rise in per capita income indicates the occurrence of economic development
Development indicators and indices
There are various types of macroeconomic and socio cultural indicators or "metrics" used to assess the relative
economic advancement of a given region or nation.
a. GDP per capita – growing development population
GDP per capita is gross domestic product divided by mid year population. GDP is the sum of gross value added
by all resident producers in the economy plus any product taxes and minus any subsidizes not included in the
value of the products. It is calculated without making deductions for depreciation of fabricated assets or for
depletion and degradation of natural resources.
b. Modern transportation
European development economists have argued that the existence of modern transportation networks- such as
high-speed rail infrastructure constitutes a significant indicator of a country's economic advancement: this
perspective is illustrated notably through the Basic Rail Transportation Infrastructure Index (known as BRTI
Index) and related models such as the (Modified) Rail Transportation Infrastructure Index (RTI).
c. Introduction of The GDI and GEM
In an effort to create an indicator that would help measure gender equality, the UN has created two measures:
the Gender-related Development Index (GDI) and the Gender Empowerment Measure (GEM). These indicators
were first introduced in the 1995 UNDP Human Development Report.
d. Gender Empowerment Measure
The Gender Empowerment Measure (GEM) focuses on aggregating various indicators that focus on capturing
the economic, political, and professional gains made by women. The GEM is composed of just three variables:
income earning power, share in professional and managerial jobs, and share of parliamentary seats.
e. Gender Development Index
The Gender Development (GDI) measures the gender gap in human development achievements. It takes
disparity between men and women into account in through three variables, health, knowledge, and living
standards.
Outline of the differences that exist between economic growth and economic development
Underdevelopment
This refers to a situation whereby the economic growth is in the negative direction (decreasing) accompanied by
uneven distribution of wealth and decrease in quality and quantity of the factors of production available
ECONOMICS CHAPTER 14 ECONOMIC GROWTH AND DEVELOPMENT NOTES PREPARED BY MR. ANTONY AMBIA Page 2
INTRODUCTION TO ECONOMIC DEVELOPMENT AND PLANNING
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 by 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 by 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;
1. Shifting from depending on agricultural sector to manufacturing sector in the economy
2. Reducing illiteracy levels
3. Increase in skilled manpower in the economy
4. Improvement in health facilities within the country
5. Increase in technology and improvement of entrepreneurial ability
6. Increase and improvement of institution that handles new methods of productive economic activities
Economic development is a process where there is improvement in the lives of all people in the country. This
involves not only living standards, such as greater availability of goods and services (and also the ability to purchase
them) but also the promotion of attributes such as self-esteem, dignity and respect, and the enlarging of people's
freedom to choose and to take control of their own lives. While a country may grow richer therefore, through the
growth of its real output, it does not necessarily mean that it will develop.
In the economic study of the public sector, economic and social development is the process by which the economic
well-being and quality of life of a nation, region, or local community are improved according to targeted goals and
objectives.
Whereas economic development is a policy intervention aiming to improve the well-being of people, economic
growth is a phenomenon of market productivity and increases in GDP;
Economic development implies economic growth plus progressive changes in certain important variables which
determine well-being of the people, such as, health and education.
Sustainability is the ability of the environment to survive its use for economic activity.
The development of a country has been associated with different concepts but generally encompasses economic
growth through higher productivity, political systems that represent as accurately as possible the preferences of its
citizens, the extension of rights to all social groups and the opportunities to get them and the proper functionality of
institutions and organizations that are able to attend more technically and logistically complex tasks such as raise
taxes and deliver public services. These processes describe the State's capabilities to manage its economy, polity,
society and public administration. Generally, economic development policies attempt to solve issues in these topics.
Economic growth deals with an increase in the level of output, but economic development is related to an increase in
output coupled with improvement in the social and political welfare of people within a country. Therefore, economic
development encompasses both growth and welfare values.
The policies of economic development encompass two major areas:
Governments undertaking to meet broad economic objectives such as price stability, high employment, and
sustainable growth. Such efforts include monetary and fiscal policies, regulation of financial institutions, trade,
and tax policies.
Programs that provide infrastructure and services such as highways, parks, affordable housing, crime
prevention.
Job creation and retention through specific efforts in business finance, marketing, neighborhood
development, workforce development, small business development, business retention and expansion,
technology transfer, and real estate development.
ECONOMICS CHAPTER 14 ECONOMIC GROWTH AND DEVELOPMENT NOTES PREPARED BY MR. ANTONY AMBIA Page 1
, Measures of Economic Development
i. Economic development occurs when national income rises and the change in national income indicates the
rate of growth
ii. A rise in per capita income indicates the occurrence of economic development
Development indicators and indices
There are various types of macroeconomic and socio cultural indicators or "metrics" used to assess the relative
economic advancement of a given region or nation.
a. GDP per capita – growing development population
GDP per capita is gross domestic product divided by mid year population. GDP is the sum of gross value added
by all resident producers in the economy plus any product taxes and minus any subsidizes not included in the
value of the products. It is calculated without making deductions for depreciation of fabricated assets or for
depletion and degradation of natural resources.
b. Modern transportation
European development economists have argued that the existence of modern transportation networks- such as
high-speed rail infrastructure constitutes a significant indicator of a country's economic advancement: this
perspective is illustrated notably through the Basic Rail Transportation Infrastructure Index (known as BRTI
Index) and related models such as the (Modified) Rail Transportation Infrastructure Index (RTI).
c. Introduction of The GDI and GEM
In an effort to create an indicator that would help measure gender equality, the UN has created two measures:
the Gender-related Development Index (GDI) and the Gender Empowerment Measure (GEM). These indicators
were first introduced in the 1995 UNDP Human Development Report.
d. Gender Empowerment Measure
The Gender Empowerment Measure (GEM) focuses on aggregating various indicators that focus on capturing
the economic, political, and professional gains made by women. The GEM is composed of just three variables:
income earning power, share in professional and managerial jobs, and share of parliamentary seats.
e. Gender Development Index
The Gender Development (GDI) measures the gender gap in human development achievements. It takes
disparity between men and women into account in through three variables, health, knowledge, and living
standards.
Outline of the differences that exist between economic growth and economic development
Underdevelopment
This refers to a situation whereby the economic growth is in the negative direction (decreasing) accompanied by
uneven distribution of wealth and decrease in quality and quantity of the factors of production available
ECONOMICS CHAPTER 14 ECONOMIC GROWTH AND DEVELOPMENT NOTES PREPARED BY MR. ANTONY AMBIA Page 2
