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Essay On Economic Growth And Economic Development

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Economic growth and economic development
In measuring and identifying the factors that stimulate the growth of the economy of a nation such as the Republic of India, a distinction needs to be made between economic growth and economic development. For a nation to experience economic growth, there must be an increase in the gross domestic product (GDP), which is a qualitative measure of the value of all finished goods and services produced in that country within a period of time.
However, economic development which is usually measured through the human development index (HDI), includes not only an increase in the output of goods and services, but an improvement in the welfare of individuals within a country. More specifically, economic development looks at the quality of life in a country, with determinants such as mean years of education, access to healthcare, average income per person (measured in GDP per capita) indicating the living standards of a country. Factors that can lead to economic development include foreign direct investment (FDI), increased quantity and quality of human …show more content…

India approached economic development through the use of import substitution industrialization, which is an inward-looking development strategy that imposes import quotas and tariffs with the purpose of protecting infant domestic industries. However, such an economic policy would negatively impact domestic consumers, forcing them to pay higher prices than the cheaper imports they would have been able to purchase if not for the trade protections. Furthermore, trade protections would lead to a distortion of comparative advantage, which would mean that firms would engage in inefficient production, wasting

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