ABSTRACT

To conclude, economic growth is not the same as economic development. The annual growth rate of a country is a very precise measure of the growth of the total volume of goods and services produced in a country during a year but says nothing about its composition or distribution. Growth is a necessary condition for real income per head to rise, but it is not a sufficient condition for economic development to take place because development is a multi dimensional concept which embraces multifarious economic and social objectives concerned with the distribution of income, the provision of basic needs, and the real and psychological well-being of people. Many poor countries in the last 30 years have experienced quite a respectable rate of growth in living standards – averaging 2-3 per cent per annum – but the absolute number in poverty has continued to rise, and the distribution of income has become more unequal. Equally, at the global level, there is little evidence of the convergence of per capita incomes across nations. The poor countries have been growing, but the rich countries have been growing as fast, if not faster, in per capita terms. While the eradication of poverty, and the narrowing of the rich-poor country divide, remains one of the great challenges of the new millennium, economic growth in poor countries is not enough by itself for economic and social development to take place when viewed in a broader perspective.