2.2 ndian onom
IntroductIon economIc growth
Similar to seers and philosophers, economists, A term coming from the life sciences, ‘growth’ in
were also party to human’s quest for a better economics means economic growth. An increase
tomorrow. We have been a witness to a number in economic variables over a period of time is
of notions coming in from the literature of economic growth. The term can be used in an
Economics in this area—starting with a very individual case or in the case of an economy or for
humble and layman’s word like ‘progress’ to the whole world. The most important aspect of
technical terms like ‘growth’, ‘development’ and growth is its quantifiability, i.e., one can measure
‘human development’. With greater dependence it in absolute terms.2 All the units of measurement
on the idea of the ‘economic man’, the world may be applied, depending upon the economic
created immense wealth in the post-War decades. variable, where growth is being studied. We have
It was in the 1980s that social scientists started a few examples:
finer studies in the area of mankind’s actions, (i) An economy might have been able to
finally challenging the very idea of the ‘economic see growth in food production during
man’ (‘rational man’). Thus starts mankind’s urge a decade which could be measured in
to introspect the lives of humanity on the planet tonnes.
earth. Meanwhile, humanity was faced with an (ii) The growth of road network in an
unique riddle of climate change. By now, courtesy economy might be measured for a decade
the UNO, the world has the World Happiness or any period in miles or kilometres.
Report.
(iii) Similarly, the value of the total production
of an economy might be measured in
Progress currency terms which means the economy
Progress is a general term frequently used by is growing.
experts to denote betterment or improvement (iv) Per capita income for an economy might
in anything. In economics, the term was used be measured in monetary terms over a
for a long time to show the positive movement period.
in the lives of people and in an economy. It had We may say that economic growth is a
both quantitative and qualitative aspects to it. quantitative progress.
After a point of time, some economists started To calculate the growth rate of an economic
using all the three terms—progress, growth and variable the difference between the concerned
development—interchangeably to mean almost period is converted into percentage form. For
the same thing. But it was only during the example, if a dairy farm owner produced 100
1960s, 1970s and 1980s that a clear meanings of litres of milk last month and 105 litres in the
these terms really evolved.1 The term ‘progress’ following month, his dairy has a growth rate of 5
became a general term with no specific meaning per cent over a period of two months. Similarly,
in economics or denoting both growth and we may calculate the growth rate of an economy
development. But growth and development were for any given successive periods. Growth rate is
allotted their clear-cut meanings.
2. As the IMF and the WB considered this yardstick of
1. Based on the analyses in Michael P. Todaro and Stephen development as quoted in Gerald M. Meier and James
C. Smith, Economic Development, Pearson Education, E. Rauch, Leading Issues in Economic Development,
8th Ed., New Delhi, 2004, pp. 9–11. Oxford University Press, New Delhi, 2006, pp. 12–14.