economic growth and economic development_presentation

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    Economic Growth and

    Economic Development

    Subhalaxmi Mohapatra

    October 12, 2009

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    Coverage of the

    PresentationGrowth Versus DevelopmentEconomic growth

    Meaning

    IndicatorsDevelopment

    Meaning

    Indicators

    Benefits of economic growth

    Costs of economic growth

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    Growth Versus

    DevelopmentEconomic Growth:

    A measure of the value ofoutput of goods and services

    over a period of timeEconomic Development:

    A measure of the welfare ofhumans in a society

    Economic growth may beone aspect of economicdevelopment but is not thesame

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    Economic Growth

    Economic growth measuresthe level of income of acountry but it does not takeinto account the incomedistribution.

    Small section of thepopulation can own a largeproportion of the wealth inthe country. The level of

    human welfare for themajority could therefore belimited.

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    Indicators of Economic

    GrowthGDPThe value of final goods and services producedwithin a country during a given period.

    GNPThe value of final goods and services producedwithin a country plus the net factor income fromabroad.

    GDP Per Capita or GNP per Capita

    Takes into account the size of the populationReal GDP / GNP

    Takes into account the adjustments for pricechanges and inflation.

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    Economic Development

    Development incorporates the notion ofa measure or measures of humanwelfare.

    It is a normative concept open tointerpretation and subjectivity

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    Human DevelopmentIndex

    A socio-economic measure

    Developed by the United Nations DevelopmentProgram (UNDP) to analyze systematically and

    comprehensively the comparative status ofsocioeconomic development in differentcountries.

    Focuses on three dimension of human welfare:

    Longevity life expectancyKnowledge access to education, literacy rates

    Standard of living GDP per capita, purchasingpower parity

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    Measure of Human welfare

    PovertyLevels of poverty

    Absolute

    Relative

    Inequality

    Sustainable development

    Proportion of activity in differentsectors of the economy

    Primary

    Secondary

    Tertiary

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    Other MeasuresNumber of doctors per head

    Disease indicators

    Economic activity per sector

    Stress levels

    Crime levelsHealth care data

    B fi f E i

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    Benefits of EconomicGrowth

    Increases in economic growth should enablemore of everything to be produced.

    Increases possibility of providing consumergoods for all.

    More consumer goods could be equated withbetter standard of living.

    Wealth generated may trickle down to those

    who are poor by means of income distribution through taxes and benefits, etc.

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    Benefits of EconomicGrowth

    Improved standard of livingassociated with increase in

    the availability of luxurygoods

    In addition

    Infrastructure building like

    roads, rail, energy,communication network etc.

    Health and educationprovisioning

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    Costs of Economic GrowthNot all income distributed equally andWealth often in the hands of a few

    Trickle down of income not necessarilyalways work in practice

    Corruption may reduce redistributioneffects

    Growth funded in part by spending inweapons which do not benefit thepopulation as a whole.

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    Costs of Economic GrowthEnvironmental problemsNegative externalities

    Pollution dumping of hazardous waste

    Environmental degradation over farmingreduces productivity of the soil, deforestationdamage to eco-systems and reduction in bio-diversity

    Non- renewable resources finite resources

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    Thank You