Economic Growth is different from economic development. Economic growth occurs when the economy’s Production Possibility Frontier (PPF) expands, which means that there is increase in the production of goods and services over a certain period of time. On the other hand, Economic development occurs when poverty, unemployment and income inequality are reduced, and standard of living and life quality are enhanced. Therefore, economic development is different from economic growth.
In order for an economy to achieve economic development, the government has to enhance productivity through investing in public and merit goods. Public goods are associated with infrastructure such as roads, bridges, dams, canals and sewage systems. Investing in these areas will allow poor people in the society to have the benefit of it, and therefore the level of enjoyment will increase and they will feel touched by the growth in the country. Merit goods mean healthcare, education and training for workers and unskilled labors. Through the investment in merit goods the economy will achieve skilled labor and unemployment will decrease.
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