Before 1960, especially up to the Second World War, very little interest was shown in the problems of the developing countries.
After the second world war new countries emerged on the political map of the world. These countries were previously colonies of the West European countries and after becoming independent became development minded. They wanted to get rid of their chronic problems of poverty, inequality, unemployment etc.
They adopted a policy of increasing national income at least @ 5% per year. However they realized that though their national income increased, their problems continued. They then moved to adopting policies to provide basic requirements to all their citizens ie food, clothing, shelter, education and other welfare facilities.
The countries of the world were classified into three
1] First world countries comprising of advanced countries.
2] Second world countries comprising of communist/socialist countries.
3] Third world countries comprising of less developed/developing countries.
The development of the third world countries is considered as one of the greatest social and economic challenges faced by mankind.
India is a developing country.
In conclusion the third world countries gave the highest priority to economic programmes which could realize the maximize economic growth rate. This was adopted on the assumption that once economic growth was achieved it would automatically solve the problems of poverty, inequality etc.
The policy makers did not differentiate between “economic growth” and “economic development”. Both the terms were used as synonyms as in general both imply “an improvement achieved over a period of time”.
However as Prof Charles P Kindleberger has rightly suggested that the experience of half a century of the post world war period has proved – the two terms cannot be treated as synonyms.
Stagnation of the economy and failure to eliminate poverty in spite of a high economic growth (as experienced in the African and Asian countries) has made it amply clear that economic growth does not necessarily lead to economic development.
Economists, therefore draw a distinction between Economic growth and Economic development.
While economic growth implies a rise in national income, economic development implies a rise in national income along with an improvement in welfare.
While economic growth natural, economic development is deliberately planned.
[eg due to an increasing in population the number of students in a college increases it is called growth. Along with this if there is an improvement in the infrastructure, results, merit, placements, sports, social and cultural activities etc popularity of the college increases, then it is called development].
The concepts are explained at the aggregate level and not at the individual or institutional level. Similarly Economic growth and Economic development refers to the entire economy and not of a particular sector or a specific economic activity. In brief both, Economic growth and Economic development are macroeconomic concepts.