What is the difference between economic development and economic growth?

As economic development takes place, residents of a region should be able to recognize improvements in living standards, such as the construction of additional roads.

Generally, both development and economic growth provide 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 make a region more competitive with other countries. However, increased productivity can occur even when other sectors are suffering from high unemployment or inflation preventing adequate consumption. As a result, developments in an economy, while often beneficial, may not always result in an expansion for the economy.

Building a region’s economy may involve building new retail spaces.

To recognize the difference between economic development and economic growth, it may be helpful to identify both occurrences. Economic growth is often measured using an indicator known as gross domestic product (GDP). Data is typically reported quarterly within a country. This value reflects the degree of production of goods and services in that region.

Some locations can be considered in the first stage of economic growth, with limited use of technology.

Economists use GDP information to assess the health of a region’s financial situation. An increase in the indicator reveals that some degree of economic expansion has taken place, while a decrease suggests that some slowdown is underway. When there is no change in GDP, the production of goods and services has remained stagnant for some time.

As economic development takes place, residents of a region must be able to recognize improvements in living standards. This progress may become evident in the construction of additional roads or the upgrading of existing infrastructure. Much of the investment that drives economic development comes from the federal government. As a result, public policy changes may occur to stimulate activity that leads to more jobs, higher incomes and more favorable conditions in areas ranging from healthcare to transportation.

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Resource allocation to areas such as the military usually occurs in the final stage of economic growth.

Government support can be provided at the state or local level. Programs may include extending funding opportunities so that new businesses have a chance to flourish. Sometimes, certain government programs and policies can provide the framework for greater 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 support each other. Investment in local infrastructure, for example, can improve trading conditions in communities. Roads that are more accessible and an increase in property values ‚Äč‚Äčthat can occur from new developments can increase the number of small businesses in an area. This can spur economic growth because favorable conditions can attract greater commerce to a region and increase profits for local stores. A greater presence of small businesses can benefit a city’s development because store owners often reinvest in a community by supporting local events.

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