Economic Growth, Development and Human Happiness

Source: World Development Report 2021
Since 1971, Bhutan has rejected GDP as the only way to measure progress—in its place, it has championed a new approach to development, which measures prosperity through formal principles of gross national happiness (GNH) and the spiritual, physical, social and environmental health of its citizens and natural environment.

Economic Growth

An increase in economic variables like income over a period of time is economic growth. The most important aspect of growth is its quantifiability, i.e., one can measure it in absolute terms. for example, The growth of the road network in an economy might be measured for a decade or any period in miles or kilometers.

economic growth is a quantitative progress.

To calculate the growth rate of an economic variable the difference between the concerned period is converted into percentage form.

The growth rate is an annual concept that may be used otherwise with a clear reference to the period for which it is used. Though growth is a value-neutral term, i.e., it might be positive or negative for an economy for a specific period.

Economic growth is used for national-level economic analyses, policy-making, and also for the study of comparative economics.

Economic Development

It was believed that once an economy is able to increase its production, its income will also increase and there will be an automatic betterment (quality increase) in the lives of the people of the economy.

For economists, development indicates the quality of life in the economy, which might be seen in accordance with the availability of many variables such as:

  1. The level of nutrition
  2. The expansion and reach of healthcare facilities—hospitals, medicines, safe drinking water, vaccination, sanitation, etc.
  3. The level of education
  4. Other variables on which the quality of life depends

If people are to be guaranteed a basic minimum level of quality-enhancing inputs (such as food, health, education, etc.) in their life, a minimum level of income has to be guaranteed for them. Income is generated from productive activities. It means that before assuring development we need to assure growth.

Higher economic development requires higher economic growth. But it does not mean that a higher economic growth automatically brings in higher economic development. Without a conscious public policy, development has not been possible anywhere in the world. Similarly, we can say, that without growth there cannot be development either.
economic development is quantitative as well as qualitative progress.

If economic growth is suitably used for development, it comes back to accelerate the growth and ultimately greater and greater population brought under the arena of development.  Similarly, high growth with low development and ill-cared development finally results in a fall in growth.

Difference between Growth & Development

Read more about Economic Development and Human Development Index in the below blog post

Economic Development and Human Development Index
The Human Development Report measures development by combining three indicators— Health, Education, and Standard of Living —converted into a composite human development index.


Sustainable Development Solution Network (a UN body) publishes World Happiness report which measures happiness and well-being of the nations to help guide public policy on the basis of the following six parameters:

  1. GDP per capita (at PPP)
  2. Social support (someone to count on)
  3. Healthy life expectancy at birth
  4. Freedom to make life choices
  5. Generosity
  6. Perception of corruption

The Meaning of Happiness

Happiness is an aspiration of every human being, and can also be a measure of social progress. Yet,

happiness is used in at least two ways :

  1. As an emotion [‘Were you happy yesterday?’], and
  2. As an evaluation [‘Are you happy with your life as a whole?’].

WHRs did show that the respondents of the surveys clearly recognize the difference between happiness as an emotion and happiness in the sense of life satisfaction.

Now we can conclude 2 things

  1. Growth is necessary but not sufficient to bring development to society.
  2. Development can't guarantee happiness because of points (2) and (5)

We will learn about happiness in detail in the below blog post.

Happiness and World Happiness Report
Most people probably believe that happiness is in the eye of the beholder, an individual’s choice, something to be pursued individually rather than as a matter of national policy.
Parikshit Patil

Parikshit Patil

Currently working as Software Engineer at Siemens Industry Software Pvt. Ltd. Certified AWS Certified Sysops Administrator - Associate.
Kavathe-Ekand, MH India