What Is the Difference between Economic Development and Economic Growth?

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  • Written By: Geri Terzo
  • Edited By: Shereen Skola
  • Last Modified Date: 30 December 2016
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Generally, both economic development and economic growth provide certain distinct benefits to a region. There are some differences between these events, however. For instance, advancements in industry, including technology and manufacturing, could certainly position a region more competitively with other countries. Nonetheless, higher productivity could occur even when other sectors are suffering through high unemployment or inflation preventing adequate consumer spending. As a result, developments in an economy, while often advantageous, may not always result in an expansion for an economy.

To recognize the difference between economic development and economic growth, it may be helpful to identify both occurrences. Economic growth is frequently measured through an indicator known as gross domestic product (GDP.) The data is typically reported on a quarterly basis in a country. This value reflects the degree of production of goods and services in that region.

Economists use GDP information to assess the health of a region's financial status. An increase in the indicator reveals some degree of economic expansion has occurred, while a decline suggests that some slowing is underway. When there is no change in GDP, the production of goods and services has remained stagnant over a period of time.


As economic development occurs, the residents of a region should be able to recognize improvements in living standards. Such progress could become evident in the construction of additional roadways or upgrades to existing infrastructure. Much of the investment that drives economic development originates from the federal government. As a result, there may be shifts in public policy that occur to stimulate the activity that leads to higher employment, greater income, and more favorable conditions in areas ranging from health care to transportation.

Government support might be provided on a state-wide or local level. Programs can include the extension of opportunities for financing so that new businesses have a chance to flourish. Sometimes, certain government programs and policies can provide the framework for further economic development, which in turn can lead to greater economic growth.

Although there are distinctions between economic development and economic growth, the two occurrences can support one another. Investment in local infrastructure, for instance, might improve the conditions for commerce in communities. Roadways that are more accessible and an increase in the value of real estate that can occur from new developments might increase the number of small businesses in an area. This can spur economic growth because favorable conditions can attract greater commerce to a region and increase the profits of local stores. A greater presence of small business can benefit a city's development because store owners frequently reinvest in a community by supporting local events.


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Post 3

Economic development and economic growth are not the same thing but they can impact one another.

Economic growth may not always lead to economic development. It mostly depends on government policies. If the government invests wisely, then growth may result in development. Development on the other hand will probably lead to economic growth. One thing that inevitably happens when there is economic development is that people have more money to spend. And when they do spend, this stimulates the economy and encourages more production and business as the article said.

It's kind of like a circle actually. If economic growth leads to development, it will lead again to growth and so on.

Post 2

@bluedolphin-- I'll to try to clarify the difference for you.

As the article said, economic growth is about GDP or gross domestic product. This is the national output of product in a country, or in other words, productivity. If GDP is going up in a country, that country is experiencing economic growth.

Economic development, on the other hand, is how this greater national wealth impacts people's lives. This can range from living standards, health care, education, etc.

Post 1

I'm still not sure what the difference is between these two terms. Which is a better measurement that the economy is doing better? Or which is more accurate in terms of long-term results?

It seems like if there is economic growth or development, the other would follow suit. But based on the article, this doesn't always happen.

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