Economic development and growth have distinct benefits, with development improving living standards and growth measured by GDP. Government support can drive both, with investments in infrastructure and small businesses stimulating growth.
In general, both economic development and economic growth offer certain distinct benefits to a region. There are some differences between these events, however. For example, advances in industry, including technology and manufacturing, could certainly position a region more competitively with other countries. However, higher productivity could also occur when other sectors suffer from high unemployment or inflation that prevents adequate consumer spending. As a result, developments in an economy, while often beneficial, may not always translate into expansion for an economy.
To recognize the difference between economic development and economic growth, it can be helpful to identify both occurrences. Economic growth is often measured through an indicator known as gross domestic product (GDP). Data is typically reported on a quarterly basis in a country. This value reflects the degree of production of goods and services in that region.
Economists use GDP information to assess the financial condition of a region. An increase in the indicator reveals some degree of economic expansion, while a decline suggests that a slowdown is underway. When there is no change in GDP, the production of goods and services has been stagnant for a period of time.
As economic development occurs, residents of a region should be able to recognize improvements in living standards. Such progress could become evident in the construction of additional roads or upgrades to existing infrastructure. Much of the investment that drives economic development comes from the federal government. As a result, there may be changes in law and order that occur to stimulate activity leading to increased employment, higher income, and more favorable conditions in areas ranging from healthcare to transportation.
Government support could be provided at the state or local level. Programs may include extending funding opportunities so that new businesses have a chance to thrive. At times, certain government programs and policies can provide the framework for further economic development, which in turn can lead to greater economic growth.
While there are distinctions between economic development and economic growth, the two occurrences can be mutually supportive. Investments in local infrastructure, for example, could improve conditions for commerce in communities. More accessible roads and an increase in property values that can result from new developments could increase the number of small businesses in an area. This can stimulate economic growth because favorable conditions can attract more trade to a region and increase the profits of local shops. An increased presence of small businesses can help a city thrive because store owners often reinvest in a community by supporting local events.
Protect your devices with Threat Protection by NordVPN
