What Is Economic Growth And What Role Does It Play In Economic Development?

Economic Growth of an economy is the increase in the value of its goods and services. The measure of Economic growth is done by measurement of GDP and GDP of an economy displays the position of the economy in the world market. Economic growth of an economy leads the economic development and the economy gets a significant position in the World trade market. Moreover, inflation in the economy decreases and the growth of the economy starts to increase.

There are many different measures of economic growth. As mentioned above Gross Domestic Product (GDP) is perhaps one of the most popular measures as it allows us to compare growth in domestic production with other countries. However, economic growth, in terms of the growth of output (domestic income), is not always a good indicator of economic development. Often growth can be exclusive of certain  social groups leading to a worsening of income inequality as the overall GDP of the country rises; people become poorer as the country grows.

Of course economic growth does not always harbour poverty. But whether it reduces poverty or not lies in the choice of policy that is used to achieve the growth; does it include the poor in production? Does the industry that is leading the growth accommodate poor workers? If so, then the economic growth can simultaneously result in economic development - a reduction of income inequality, leading to a general increase in living standards.