Development & Economic Growth

All or almost all nations in the world desire to be wealthy, and maintain an economy that is stable & consistently rising. What is it that economic growth bring about that makes it so important and to all?

The Gross Domestic Product (GDP) has long been used as a benchmark for measuring the economies of the world. With GDP, We may say that a country is “rich” or “poor,” and know whether the population has a high or low standard of living (using GDP per capita.) In addition, positive fluctuations in the GDP may be termed as “economic growth,” while negative fluctuations are declines of the economy.
Webster’s Dictionary defines development the process of “growth, evolution, and differentiation.” With this definition in mind, development may cover almost all aspects of society. Even economic growth can be characterized as one type of development, that is, “Financial Development.” Many other types of development occur in a society that in one way or another, but not necessarily, go hand in hand with economic growth. Social development, health care development, and cultural development are some examples.
Development in these aspects of society may somehow be coupled to economic growth. This is because the more the resources a nation has, the more wealth is allocated to all aspects of society. For instance, the Japanese government swears that they only allocate 1% of its national budget to defense. But this insignificant proportion of their spending may already represent the entire economies of poorer Third-World countries. Thus, more money is allocated to the development of defense of Japan as compared to poor nations who have to make use of such amount to all facets of society.
It may be safe to conclude that economic growth and development correlates with each other, but not essentially a relationship of causation. This will depend entirely on how the government can make use of a nation’s wealth and be able to vary its spending. If it wishes to put 100% of its GDP on investments and foreign trade, then there would be no more room for the social & cultural development, and the like. On the other hand, if it does not venture on rewarding investments but rather concentrate on non-earning projects of development, then growth on the part of the government may somehow be hindered. Therefore, it’s really all a matter of diversification of government spending: If growth in the economy goes together with growth of all other sectors of the country, then that is “development”.
President Gloria Macapagal-Arroyo often sings her own praises by saying that GDP growth has been growing steadily over her short administration. In fact, The GDP growth rate of the country last year even reached its highest level since the 1997 financial crisis. However, the starving masses of the country are complaining that this so-called “growth” was never felt by them, and only rich entrepreneurs are able to take advantage of this economic upturn. Thus, the economic growth seemed artificial because development was really not felt by the people: accumulation of human labor, capital and other resources may not be all that important to the development of a nation.