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Abstract:
The concepts of economic development and economic growth differ significantly, but are in some instances used as interchangeable notions. It is important for policy formulators and decision makers to understand the relationship between the two. Development strategies should be formulated to achieve sustainable inclusive economic growth and economic development. These two economic concepts influence each other; however, there is limited clarity on the relationship. The aim of the study was to determine the relationship between these in the Vaal Triangle region, South Africa. Economic development is a broad concept and various methods can be used to measure it. For the purpose of this research, an economic development index was developed, which consists of employment, poverty levels and human development index (HDI). This index assists in the measurement of the relationship between economic development and economic growth. A time series econometric model was used to measure the relationship between the two variables. The results indicated that economic development causes economic growth in the long and short run. Therefore, it is important to focus on economic development, through improved HDI, increased employment and poverty alleviation, in order to achieve inclusive economic growth.
Keywords: economic development, economic growth, employment, human development index, poverty, Vaal Triangle region, South Africa.
JEL Classification: 011; 015.
(ProQuest: ... denotes formulae omitted.)
Introduction
In many instances economic growth and economic development are terms that are, mistakenly, interchangeably used, despite the two concepts having different meanings and objectives. Economic development includes the concept of economic growth but also includes structural transformation of the economy and society (Lindbeck 1992). Although economic growth is necessary for development, it is not a sufficient contributor on its own to economic development (Ezeala-Harrison 1996, Meyer and Meyer 2016). According to Todaro and Smith (2015) inclusive economic growth is a requirement for economic development, but growth without development is the norm. Bucknall (2013) and Meyer et al. (2016) states that economic growth can be measured by output and income of a region, as a quantitative measure. In comparison, Khan and Khan (2012) state that economic development occurs when the standard of living of a large majority of a country's population increases; this includes both income and other factors such as health and literacy. According to Todaro and Smith...