Notes for 4.8.5 Possible relationship between economic growth and economic development - IB | RevisionDojo
4.8.5 Possible relationship between economic growth and economic development Notes
As we already saw, economic growth could happen without causing an economic development, however is it true that other way around?
Can economic development happen without economic growth?
To answer this question we can use a Production Possibilities Curve(PPC) model:
Figure 1: economic development can occur without economic growth
In the Figure 1 above we can see a PPC curve with manufacturing goods on the Y axis and merit goods on X axis:
Assume that currently the economy is producing at point A on PPC1.
We know from previous chapters that growth in the productionpossibilities of the economy will cause a rightward shift of the PPC1 curve to the PPC2 curve.
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Question 1
Recap question
If an economy experiences a surge in manufacturing technology but continues to allocate the same proportion of output to merit goods, which outcome occurs?
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Note
Understanding Economic Growth and Development
Economic growth refers to an increase in a country's output of goods and services, typically measured by GDP.
Economic development encompasses improvements in quality of life, including education, health care, and living standards.
While related, these concepts are not the same - growth focuses on quantity, while development focuses on quality.
AnalogyThink of economic growth as building a taller skyscraper, while economic development is about improving the quality of life for the people living inside - better facilities, safety, and comfort.
DefinitionEconomic GrowthAn increase in a country's output of goods and services, usually measured by GDP.
DefinitionEconomic DevelopmentImprovements in quality of life and well-being, including education, health care, and living standards.
