Que- Economic growth figure does not give us correct assessment of an economy for the following reasons.
First, economic growth is associated with an increase in GNP/GDP per capita. But per head GNP does not, by itself, constitute or measure welfare or success in development. This is because per capita income does not give any information about income distribution. It is observed that despite high rate of growth, some of the countries experience high incidence of poverty and unemployment.
Secondly, economic growth does not talk about the quality of life. In poor developing countries, people end themselves at low level of literacy, low standards of health and nutrition, etc. Miseries arising from lack of food and shelter do not get reflected in the concept of economic growth.
Thirdly, economic growth does not deal with environmental issues. In the process of achieving higher economic growth, environmental considerations like depletion of renewable natural resources, air pollution, etc., are given little weightage. These aspects have an important bearing on the economic development of a country in the long run. Desire for higher and higher economic growth is associated with environmental damages. It is economic development that cares for environmental issues.
It is, thus, obvious that economic development involves something more than economic growth. In fact, there are certain qualitative dimensions in the process of development that are conspicuous by their absence in the growth or expansion of an economy. Economic development implies both more output and changes in the technical, institutional arrangements by which it is produced, and a change in attitudes and values.
“Development concerns not only man’s material needs but also improvement of the social conditions of his life. Development is, therefore, not only economic growth but growth plus change—social, cultural and institutional as well as economic. Development is, thus, not purely an economic phenomenon; it has to be conceived of as a multidimensional process.”
Naturally, economic development is a value-based concept. It should include not only the acceleration of economic growth but also the reduction of inequality and eradication of poverty, increase in employment opportunities and welfare of the masses, etc.
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