Title Unit 3 Macroeconomics ✅

MACROECONOMICS SECOND YEAR M.A. SECOND YEAR ECONOMICS
UNIT III: GROWTH THEORIES 15 LH
Concept of Economic Growth and Economic Development In order to visualize the concept of economic development, the meaning of economic growth should be understood. Economic growth refers to increase in the aggregate level of national income, output and employment over time. However, it does not consider how the increased income, output and employment affect the lives of people. But economic growth refers to the process of transformation of low income countries into high income ones. Economic development includes something more than economic growth: it is taken to mean growth plus change (positive), and also an upward movement of entire social system. Economic development is a dynamic concept. The economic prosperity of any country can be defined as the economic development. Economic development has direct relation with the economic problems of underdeveloped counties. 1
Economic growth is measured by per capital income of an economy. If there is sustained rise in per capita income over long time period, there is economic growth. Per capital income is obtained by dividing total national income by size of population. However, economic development needs economic growth or growth is a necessary but not sufficient condition for economic development. There may be growth without development. Economic development should address the following three evils of human life, poverty, inequality and unemployment. If any one of these problems have been growing worse, then there is no economic development even if per capita income doubled. Economic growth is possible when productivities of factors of production- land, labor, capital etc. increases over time and when technical progress occurs.