Economic Growth is defined as the incremental growth in real national income (when looked at from the demand side) or national output (when looked at it from the supply side). Whereas economic development talks about the holistic development or betterment in the lifestyle or quality of life of the residents of a region. So, it is evident that economic growth is more quantitative in nature whereas economic development is more qualitative. Actually, the increment in qualitative growth should be reflected in the quantitative measures and vice versa.
From the perspective of Business, quantitative growth enables the feasibility of a business plan in a particular geography. It gives businesses a stratospherical view of the economy and enables a common platform for comparison between various regions. From Society’s vantage point, qualitative growth is more relevant where it talks about several aspects and standards like environmental quality, life expectancy, employment, literacy, gender equality, etc.
Factors such as literacy are more key to economic development and Society’s perspective.
The Government and Administration here play the role of a ringmaster, where they have the capability to influence both the quantitative and qualitative aspects through various policies and reforms. Through various fiscal and monetary policies, they have the capability, up to a certain limit, to control or influence the growth figures and quality of life. By various reforms, both fiscal and structural, can encourage Businesses to invest more and in turn fuel the growth cycle. Society benefits from it by increase per capita income and propels the growth cycle further.
More income leads to better health, lifestyle. Society returns the favor by an increased level of discretionary spending which excites Businesses to invest more. So, all three stakeholders act in tandem and play a crucial role in the economic growth and development of a nation. Thus, both economic growth and economic development should go hand in hand, making it sustainable for a nation.
Although numbers can aptly respond to a question more definitively, the way you arrive at it can be more discretionary in nature. Like for example, your good grades can evidently show that you are a good student, but it never talks about how you fetched those marks (per see by cheating in the paper or studying throughout the term). Similar is the case for GDP numbers. Policies that guide the pathway to explicit GDP numbers, if applied to wealth increase for a particular band of people, at the expense of income of the rest, can lead to further divergence and unevenness in the wealth distribution of the nation.
Redistribution measures, like progressive tax systems, welfare programs, subsidies, etc., if not enacted seriously, can lead to further wealth accumulation. The GDP numbers will show a definitive positive trend for sure but when delved deeper, it won’t be much trouble to figure out the fact that, the bandgap between the privileged ones and the downtrodden has significantly diverged. Economic inequality can be even more vulnerable when it results from the environment in which a person is brought up, rather than from talent. Deficiency in properly construed public policy, which has the capability to facilitate growth and harmonize the imbalance, can further lead to inequality in society.
Superficially, from a Business perspective, the GDP figures might prove to be working in sync with the overall growth of the economy, thus creating an illusion. Now the question is whether that kind of growth can be sustainable in nature or at some point in time it’s going to give up the glory. It doesn’t require much analysis to infer that, by leveraging the tradeoff between Economic Output and Economic Equality, slow yet wholesome development is always favorable in a business environment which can be useful in retaining progressive growth in the bottom line of the entire industry.