Significant Distinctions between Economic Growth and Economic Development
Economic growth measures the amount of money that is changing hands in the economy. It thus refers to the rise in the value of everything that is produced in the economy. Growth takes place when the worth and number of commercial transactions increase in the economy. Economic expansion does not factor in the magnitude of the informal financial system. The informal financial system which is also the black financial system is an economic action that is unrecorded. Economic growth gauges an increase in real Gross Domestic Product (GDP). It can therefore be expressed in terms of GDP and Gross National Product (GNP), which assists in measuring the size of the economy. By this, we are able to compare in absolute and percentage change, for example, how an economy has differed in terms of performance from that of the previous year. It is as a result of the increase in quality and quantity of the resource and advancement of technology.
Economic development on the other hand is termed as the progression of increase in volume of production alongside the technological improvement, inflation on the living standards and institutional changes among others. Economic development differs from one individual to another. Development leads to the increase in the quality of an individual’s life (Wennekers & Sander, 11). It could be materially, socially, politically, psychologically or spiritually. Development in the economy is measured by the Human Development Index (HDI). It is based on a country’s economy and is used in the statistical ranking process.
Objectives of the General Agreement on Tariffs and Trade General Agreement on Tariffs and Trade was a collection of multiparty trade agreements. These agreements were designed at the elimination of the quotas as well as the cutback of tariff responsibilities amongst the constricting nations. It played a vital role and was a very effective instrument of world trade liberization. It consequently played a key function in the development of the world trade in the subsequent half of the twentieth century. GATT ensured a considerable reduction of responsibilities of tariffs and other trade obstacles and taking away of preferences, on a give-and-take and communally beneficial benefit. As embodied in categorical nation clauses that are most favored, it meant that once a nation and its principal trading associates had approved to the reduction of a tariff, that tariff became robotically extended to every other GATT associate. GATT consisted of a long program of particular tariff special considerations for each contracting nation, which represented the tariff rates according to how each nation had agreed to extend to other contracting nations.
GATT was also responsible for the fundamental and most important role of protection through tariffs as opposed to import quotas or other quantitative trade limitations (Hinkelman, Edward G & Sibylla Ortiz, 70). The other general rules included custom regulations that were uniform. It also included the responsibility of every contracting nation to bargain for a slash in tariffs when requested by another. An escape clause was put in place that served the purpose of permitting contracting nations to change agreements. This was only allowed if their domestic products went through disproportionate losses due to trade concessions. GATT’s standard business entailed bargains on particular trade challenges that affected specific trading nations or commodities. However, chief multilateral trade conferences were held from time to time to work out various issues. Among those issues included tariff reductions.
Hinkelman, Edward G., and Sibylla Ortiz. Glossary of international trade handbook of the global trade community. Petaluma, Calif: World Trade Press, 2009. Print.
Wennekers, Sander. The relationship between entrepreneurship and economic development is it u-shaped. Boston: Now, 2010. Print.