Economic Growth & Development

Economic Growth and Development Defined

Economic growth is defined in positive terms as the rate of change in gross national productGNP (Gwartney, Stroup, and Studenmund, 1990, p. 793). Within this definition, a decline in GNP would be referred to as negative growth. There are two general types of economic growth. Extensive economic growth refers to an expansion of the total output of goods and services, regardless of the change in per capita output. Intensive economic growth refers to an increase in per capita output.

Development is a normative concept that encompasses economic growth, but which also includes structural and distributional changes which should lead to improvements in the living standard for a majority of an economy's population (Todaro, 1987, p. 87). Thus, if economic growth occurs but most of the benefits of such growth accrue to a relatively small economic elite, then positive development in that society has not occurred.

Factors Involved in Economic Growth

Three theories of development are widely accepted in the early1990s. These three theories are the (1) diffusion model, (2) structuralist model, and (3) the dependency model (Wallerstein, 1985, pp. 101154).

The diffusion model holds that progress is a function o

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of population. Thirlwall (1990, pp. 83109) defined dualism as economic and social division in an economy, such as differences in the level of technology between sectors or regions, differences in the degree of geographic development, and differences in social customs and attitudes between indigenous and an imported social system. Thirlwall (1990, pp. 83109) contended that dualism is a state of affairs in which developing countries may find themselves in the early stages of development, and which may have significant implications for their later development. Gunnar Myrdal (1957, pp. 5960) pointed out that effective attempts to eliminate social imbalances typically must be based upon the acceptance of the philosophical tenet of equality, and that in many developing economies, the reactionary belief in innate differences in quality between groups of people having different standards of economic wellbeing tends to persist. According to this interpretation, it would be difficult to eliminate many of the manifestations of dualism, without a preceding change in philosophical outlook. The process of cumulative causation accepted by Thirlwall (1990, pp. 83109) is the hypothesis p
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