Economic Development

High levels of economic growth or GDP has been used by many as a measure of economic development or prosperity of a country. Since development is synonymous with poverty eradication, some writers believe that economic growth entails the reduction of poverty in a country while others believe that using GDP as an economic measure is not sufficient. This paper will discuss the meaning of economic growth or GDP in relation to development and the validity why some African leaders believe that high levels of GDP is an assurance of low poverty levels and latter argue that development or poverty eradication is much more than high level of average income and growth.

Economic Growth is usually measured as the rate of change in Gross Domestic Product (GDP). Gross Domestic Product is the total value of goods and services produced in a country over a period of time. GDP may be calculated in three ways: (1) by adding up the value of all goods and services produced, (2) by adding up the expenditure on goods and services at the time of sale, or (3) by adding up producers’ incomes from the sale of goods or services. When comparing countries of different sizes, this measure has to be normalised by the size of population to give a GDP per capita or per person. (Uma, 2004)

According to Uma (2004), growth is the measure of sustained increases in output or gross domestic product (GDP). It therefore helps to provide an indication of potential improvements in living standards and quality of life in the future. Uma argues that people’s standards of living depend on their incomes, which in turn are related to GDP per capita. Because growth leads to economic development, the benefits of growth must trickle down to every body by increasing the economy, improved living standards and eradication of poverty. Growth is therefore simply the means to an end. This is evident in the findings of the World Bank report 1997; countries like Korea, Singapore and Hong Kong that were considered...