Economic Development: Measurement and Indicators

Economic growth and economic development are related but distinct concepts. Growth refers to an increase in a country's output (GDP), while development is a broader concept encompassing improvements in living standards, health, education, and freedom. This lesson examines how development is measured, the key indicators used, and the characteristics of developing economies.

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Economic Growth vs Economic Development

Key Definition: Economic growth is an increase in a country's real GDP (or real GDP per capita) over time — a quantitative measure of output.

Key Definition: Economic development is a qualitative improvement in living standards, including better health, education, political freedom, reduced inequality, and environmental sustainability. Growth is necessary but not sufficient for development.

A country can experience growth without development — for example, if GDP increases but the gains accrue only to a small elite, or if growth is based on resource extraction that damages the environment and provides few jobs.