Economic Growth Vs Economic Development

What is development economics about? More than growth, Structural change, Institutional change. Least-developed country is not only have lower levels of per-capita income (productivity), but also lack institutions common to developed country is; e.g. law, property rights, administrative systems. The first step in defining economic development is distinguishing it from the concept of economic growth. Economic growth has a strong theoretical grounding and is easily quantified as an increase in aggregate output. In theorizing economic growth, David Ricardo (1819), and later Robert Solow (1956) and many others conceptualize an economy as a machine that produces economic output as a function of inputs such as labor, land, and equipment. Growth occurs

Government is a vehicle for collective action: an agent for whom the principal is its citizens and the businesses within its borders. While the not-for-profit and even for-profit sector has taken over many functions previously allocated to government (Salamon 2002), the results of this privatization are mixed. Government is the principal inclusive vehicle for organizing economic, social and civic life. In contrast, markets are concerned with transactions and coordinate activity through prices. The invisible hand works on the logic that firms attempt to maximize profits or shareholder value while workers seek to maximize their wages. The result is the all too familiar race to lower costs through relocation or the de-skilling of the labor force. This market logic does not account for longer-term potential firm benefits due to worker suggestions for new product improvements or even Henry Ford’s epiphany that if he paid his workers more they could afford to buy his

For government, articulating a vision and meeting a set of broad objectives is more difficult as a result of competing interests, the need to consider diverse perspectives, and the inability to divest mandated but unprofitable and sometimes unpopular activities. In the absence of an accepted consensus vision for government, it is too easy to give in to competing short term demands or become diverted to serve other purposes. An articulated vision for government is crucial to following a long run course. From a societal point of view, increases in quality of life, which includes long-term prosperity, is the ultimate vision of economic development for democratic governments. Prosperity and quality of life are often synonymous with the concept of the good life, which encompasses a sense of material comfort as well as psychological satisfaction and health (Lane 1994). Indeed, the concept of the American Dream is an ideal of a good life based on a classless society with meritocratic advancement and continual progress (Cullen 2003). High quality of life is an integral outcome for government policy. It would be difficult to argue for the opposite as an articulated objective for government in any