Economic Growth

Economic growth is an increase in a country’s productive capacity as measured by comparing gross national products (GNP) in a year with the GNP in the previous year. It is increase in output per unit of input. Economic growth is a sustained increase in per capita or per work product. Growth is a gradual and steady increase in the rate of saving and population.

For proper growth, Economic growth must be bigger than population growth so the per capita income is increased.

Essential components for economic growth

  • Capital formation
  • Improve quality of inputs
  • Industrialization is necessary
  • Divert resources from low to high output sector
  • Improve labor force
  • Technology advancement

13th plan target

  • Economic growth: 6%
  • Agriculture growth: 4.5%
  • Non- Agriculture sector: 6.5%
  • Employment growth: 3.2%

Economic development

It is a progress in economy, or the qualitative measure of this. Economic development usually refers to the adoption of new technologies, transition from agriculture – based to industry based economy, and general improvement in living standards. It can also be referred as quantitative and qualitative changes in the economy in multiple areas like development of human capital, critical infrastructure, regional competitiveness, social inclusion, health, safety, literacy and other initiatives.

  • 1930s – Development by plan
  • 1950-70 – Trickle down approach
  • 1970s – Basic need fulfillment approach
  • 1980s – Infrastructure development
  • 1990s – Human development & sustainable development
  • 1995s – Growth with equity and poverty reduction
  • 2000s – Pro poor growth approach

Measures of economic development

  • Life expectancy
  • Literacy
  • Degree of decentralization
  • Infant mortality rate
  • Distribution of income
  • People’s participation

Problems of economic development

  • Low technology development
  • Subsistence forming & low tech use
  • Low development of industrial sector
  • Centralized development strategy
  • Lack of skilled manpower
  • High unemployment
  • Poverty and backwardness
  • Low economic growth
  • High import low export
  • Disparity in income distribution
  • Low capital formation
  • Lack of good governance

Things to do for economic development

  • Political stability
  • Build human resources
  • Technology development & use
  • Focus on industrial growth
  • Follow rules of law
  • Lower unemployment rate
  • Focus on capital building
  • Achieve high sustainable growth
  • Infrastructure development
  • Decentralization of governance
  • Work on environmental stability
  • Reduce income distribution gap
  • Poverty alleviation
  • Good governance as focus