GROWTH VERSUS DEVLOPMENT

(This document is the result of my independent work. All sources of information used in the document have been duly acknowledged.)

Growth & Development: The two words are used as synonyms almost everywhere...but they are poles apart. One may foster the other, but neither is necessary for the other! The difference between the two has been well captured by works on Development Economics, a branch of economics that emerged in the late 1940's. Economic growth can be defined as the increase in value of the goods and services produced by an economy. 

It is conventionally measured as the percent rate of increase in real gross domestic product (GDP), or potential output, ie, production at full employment which is caused by growth in aggregate demand.It is usually calculated in real terms, i.e. inflation adjusted terms. Growth is something for which most companies, large or small, strive. Small firms want to get big, big firms want to get bigger. Indeed, companies have to grow, observed Philip B. Crosby, author of The Eternally Successful Organization, "if for no other reason than to accommodate the increased expenses that develop over the years. Salaries rise as employees gain seniority. The cost of benefits rises because of their very structure, and it is difficult to take any back, particularly if the enterprise is profitable. Therefore cost eliminations and profit improvement must be conducted on a continuing basis, and the revenues of the organization must continue to increase in order to broaden the base."

Different organizations have different parameters to measure growth.  The most meaningful yardstick is one that shows progress with respect to an organization's stated goals.

An organization may grow by pursuing one of the following routes:

• Joint Venture
  
• Licensing
  
• Selling off old businesses
  
• Venturing into new markets
  
• New Product Development
  
• External financing
  

Organization development is the process through which an organization develops the internal capacity to most efficiently and effectively provide its mission work and to sustain itself over the long term. Thus there is a direct relationship between organizational development work and the achievement of organizational mission. Organization development, according to Richard Beckhard, is defined as: “a planned effort, organization-wide, managed from the top, to increase organization effectiveness and health, through planned interventions in the organization's 'processes', using behavioural science knowledge. “ Organization Development involves organizational reflection, system improvement, planning, and self-analysis.

According to Warren Bennis, organization development (OD) is “a complex strategy intended to change the beliefs, attitudes, values, and structure of organizations so that they can better adapt to new technologies, markets, and challenges.”

There is no single definition that encompasses all the aspects of economic development. The most comprehensive definition perhaps of economic development is the one given by Todaro: 

‘Development is not purely an economic phenomenon but rather a multi – dimensional process involving reorganization and re orientation of the entire economic and social system. 

Development is a process of improving the quality of all human lives with three equally important aspects. These are: 

1. Raising peoples’ living levels, i.e. incomes and consumption, levels of food, medical services, education through relevant growth processes. 

2. Creating conditions conducive to the growth of peoples’ self esteem through the establishment of social, political and economic systems and institutions which promote human dignity and respect. 

3. Increasing peoples’ freedom to choose by enlarging the range of their choice variables.’ 

Certain meaningful indicators of development are often correlated with GDP per capita, such as The Physical Quality of Life Index, Human Development Index, Human Poverty Index and the Human Suffering Index, which help us include the non-monetary factors of development. 

Amartya Sen defines economic development in terms of “entitlements”, personal freedom, freedom to choose from a range of options. While economic growth may lead to an increase in the purchasing power of people, if the country has a repressed economy, there is lack of choice and hence personal freedom in restricted. Hence once again growth has taken place without any development.

While economic growth may result in an improvement in the standard of living of a relatively small proportion of the population, the majority of the population remains poor. It is how the economic growth is distributed amongst the population that determines the level of development.Undoubtedly economic growth and economic development are complementary. Economic development may be considered our short term goal towards the achievement of utopia in the long run, and economic growth is one of the myriad essential factors necessary for bringing about economic development, a much broader term concerned with a lot more than just the monetary aspect of development. 

Reference:

1.Retrieved September 8, 2008, from http://www.enotes.com/small-business-encyclopedia/organizational-growth

2.Retrieved September 8, 2008, from http://en.wikipedia.org/wiki/Economic_growth

3.Retrieved September 8, 2008, from http://en.wikipedia.org/wiki/Organizational_development

4.Retrieved September 8, 2008, from http://www1.ximb.ac.in/users/fac/dpdash/dpdash.nsf/pages/CP_Growth

The post is influenced by my background (B.Sc in Economics,St. Xavier's College, Kolkata) and hence contains certain concepts of Development Economics learnt during Graduation, and taken down as notes.