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Economic Growth: The Unit Of Analysis

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Development is a normative concept due to which there is a constant tussle in conceptually defining development. There are different models of development parse but it has been increasingly equated to economic development and wrongly paralleled to economic growth. In strictly economic terms, development has conventionally meant a sustained annual increase in GNP (or GDP) at rates that vary from 5 percent to 7 percent or more (Kapila, 2013). Till the 1960’s the term economic development was used as a synonym to economic growth; where the latter meant increase in per capita GNP in real terms (adjusted to inflation). According to the economic historian Kindleberger, “Whereas economic growth merely refers to a rise in output, economic development …show more content…

The focus is on increasing the national income of a country and the trade-offs between environmental protection and accumulation of wealth and maintain inter-generational equity are tackled with market prices that is used as a corrective mechanism for social, distributional and environmental concerns. This growth model is a means to a larger end that is- human development and how people can aspire to what they wish to be exercising their real freedoms. This model puts people before the market economy and revolves around the development of the individual to its full potential. According to Dre`ze and Sen, “In recent years, development economics has been also taking a more inclusive view of the nature of economic development. One way of seeing development is in terms of the expansion of the real freedoms that the citizens enjoy to pursue the objectives they have reason to value, and in this sense the expansion of human capability can be, broadly, seen as the central feature of the process of development ” (Dre`ze & Sen, …show more content…

It proposes that the growth model as seen in China with rising levels of per capita income came at the cost of future generational disparity. The trend in the economic development was to more from primary to secondary and then to tertiary sector that primarily comprises of services. This model misses on the quality of service being provided and who is the provider? Stiglitz proposes that there should be a shift from production being a measure of development to well being being a measure. There are two components of well being- material and qualitative well being. Material aspect of it can be measured like the shift in the growth model of measuring GDP to measuring income and consumption. The distribution of wealth and income and the inequalities and disparities that exist need to be filled. Piketty believed in observation of social income and distribution of income. The other aspect is the qualitative part that looks at the non-market dimensions of development that is health, education, the pattern of public expenditure, measurement of personal work and the quality of work produced. This model gained significance from 1990’s and detailed out in the Human Development Report that redefines development filling the lacunae the previous models of

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