Economic

Development
Economic
Growth
Implications: Economic
development implies
changes in income,
savings and investment
along with progressive
changes in socio-
economic structure of
country (institutional
and technological
changes).
Economic growth
refers to an increase in
the real output of
goods and services in
the country.
Factors: Development relates
to growth of human
capital indexes, a
decrease in inequality
figures, and structural
changes that improve
the general
population's quality of
Growth relates to a
gradual increase in
one of the
components of Gross
Domestic Product:
consumption,
government spending,
investment, net

Economic
Development
Economic
Growth
life. exports.
Measurement: Qualitative.HDI
(Human
Development Index),
gender- related index
(GDI), Human
poverty index (HPI),
infant mortality,
literacy rate etc.
Quantitative. Increase
in real GDP. Shown
by PPF.
Effect: Brings qualitative and
quantitative changes in
the economy
Brings quantitative
changes in the
economy
Concept: Normative concept Narrower concept
than economic
development
Relevance: Economic Economic growth is a

Economic
Development
Economic
Growth
development is more
relevant to measure
progress and quality of
life in developing
nations.
more relevant metric
for progress in
developed countries.
But it's widely used in
all countries because
growth is a necessary
condition for
development.



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Jagdish Bhagwati v/s Amartya Sen debate
Amartya Sen and Jagdish Bhagwati, tackling each other on what Indias
governance priorities should be.
Sen is a Nobel Prize winner in economics and a professor of economics
and philosophy at Harvard University.


Bhagwati is a Columbia University professor of economics, who has been
nominated for the top honour several times. Along with Sen and Avinash
Dixit, he is considered to be among the three greatest Indian economists
ever.
While Sen believes that India should invest more in its social
infrastructure to boost the productivity of its people and thereby
raise growth.
Bhagwati argues that only a focus on growth can yield enough
resources for investing in social sector schemes.
Investing in health and education to improve human capabilities is
central to Sens scheme of things. Without such investments,
inequality will widen and the growth process itself will falter, Sen
believes.
Bhagwati argues that growth may raise inequality initially but
sustained growth will eventually raise enough resources for the state
to redistribute and mitigate the effects of the initial inequality.
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Kerala Vs Gujarat


The Bhagwati-Panagariya duo argues that whatever Kerala had achieved
was thanks to a growth-oriented approach. They suggest that Kerala's high
social indicators have much less to do with the so-called Kerala model,
and more to do with global trade, growth-oriented policies and private-
sector participation. "To keep asserting such causality [Sen's argument] is
the mark of a lazy intellect and is, besides, dangerous in its potential for
misleading us to make harmful policy choices,"


But many economists argue that this amounts to misrepresentation of
facts. Says Suresh Babu, a professor of economics at IIT Madras: "In the
current debate we need to be careful to not confuse between 'levels' and
'rates of change'. Professor Bhagwati focuses more on rates of change,
while Sen argues that levels matter. For Gujarat some recent rates of
change might look impressive, as it is on a small base, while for Kerala
even incremental changes on high levels are impressive as they are
difficult to come by."


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