Economic Development

In the economic study of the public sector, economic and social development is the process by which the economic well-being and quality of life of a nation, region, local community, or an individual are improved according to targeted goals and objectives.

The term has been used frequently in the 20th and 21st centuries, but the concept has existed in the West for far longer. "Modernization," Westernization," and especially "Industrialization" are other terms often used while discussing economic development. Historically, economic development policies focused on industrialization and infrastructure, but since the 1960s, it has increasingly focused on poverty reduction.

Whereas economic development is a policy intervention aiming to improve the well-being of people, economic growth is a phenomenon of market productivity and increases in GDP; economist Amartya Sen describes economic growth as but "one aspect of the process of economic development." Economists primarily focus on the growth aspect and the economy at large, whereas researchers of community economic development concern themselves with socioeconomic development as well.

As a result, the precise definition of economic development is contested: while economists of the 20th century viewed development primarily in terms of economic growth, sociologists instead emphasized broader processes of change and modernization. Development and urban studies scholar Karl Seidman summarizes economic development as "a process of creating and utilizing physical, human, financial, and social assets to generate improved and broadly shared economic well-being and quality of life for a community or region." Daphne Greenwood and Richard Holt distinguish economic development from economic growth on the basis that economic development is a "broadly based and sustainable increase in the overall standard of living for individuals within a community," and measures of growth such as per capita income do not necessarily correlate with improvements in quality of life. Economic development is a wider concept and has qualitative dimensions. Economic development implies economic growth plus progressive changes in certain important variables which determine well-being of the people, e.g. health and education. The University of Iowa Center for International Finance and Development states:

"Economic development" is a term that practitioners, economists, politicians, and others have used frequently in the 20th century. The concept, however, has been in existence in the West for centuries. "Modernization," "Westernization," and "Industrialization" are other terms people have used while discussing economic development. Economic development has a direct relationship with the environment.

Though the concept's origin is uncertain, some scholars argue that development is closely bound up with the evolution of capitalism, and the demise of feudalism. Others link it to the postcolonial era.

Mansell and Wehn also state that economic development has been understood by non-practitioners since the World War II to involve economic growth, namely the increases of per capita income, and (if currently absent) the attainment of a standard of living equivalent to that of industrialized countries. Economic development can also be considered as a static theory that documents the state of an economy at a certain time. According to Schumpeter and Backhaus (2003), the changes in this equilibrium state to document in economic theory can only be caused by intervening factors coming from the outside.

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