As a business owner, or even as an active member of society, a firm understanding of economic growth and development is beyond essential. The phrase “economic growth and development,” however, can apply to nearly every industry and field where money is handled. Before we begin, ask yourself a guiding question. Do you want to maintain your own economic growth and development? Or do you want to better understand how to track economic growth and development external to your direct operations? These two types of economic growth and development make up “Local” and “National” economic growth and development.
Economic Growth and Development on a Local Level
Local Economic Growth
Economic growth and development are terms most often associated with a country’s economy. But the principles of management that apply to countries can still be useful to business owners and even entrepreneurs. Anyone who deals with money that fluctuates in quantity deals with economic growth and development. If you sell a product, tracking the number of sales over a period of time and comparing it to another tracked period of time will produce a difference. That difference (if reflecting growth over time) represents your effective economic growth. Quarterly, or yearly, tracking your cash influx is similar to tracking your economic growth.
Local Economic Development
Local economic development is improvements to a business or money-making organization that they believe will contribute to further economic success.
Economic development for a business or entrepreneur can be read in two distinct ways. These are in improving your hypothetical ability to produce capital, or in your workforce’s ability to work. As your business increases its amount of capital, you are economically developing. But tracking those numbers and marking an increase simply accounts for economic growth. But the more theoretical concept behind the development is your team’s ability to develop your product or services. If you increase hiring or make a team training program, this is adding to your economic development. You are developing your ability to economically grow.
Economic Growth and Development on a National Scale
National Economic Growth
National economic growth is a tracked increase in the Gross Domestic Product of a country based on annual or quarterly financial records.
Every functional nation on the planet tracks economic growth. Usually, countries track economic growth by comparing gross domestic product (GDP) statistics. GDP is the total value of a country. This figure is calculated by adding all of a country’s exportable goods and services. Countries then frequently compare rates of GDP change to see which countries are expanding faster.
National Economic Development
National Economic Development is any improvement, decision, or policy by a country that promotes spending, trade, or welfare.
Economic development is seeing the quality of life or production has grown in a country. Consider this example. Belgium invests resources into modernizing its civil servant programs and making them better. The people of Belgium have wider access to education which very likely will make Belgium a more profitable country. This means that Belgium’s program promotes economic development. Whether Belgium’s education program actually worked is dependent on economic growth numbers. Economic development is the idea of improving a country’s potential ability to ship products, render services, and make money.
Know the Concepts, Know Their Value
Both economic growth and economic development are distinct concepts all their own. While it is natural to pair the two ideas together, it is important to understand that they both have unique elements. Economic growth must be tracked over a time period. With that in mind, economic growth is usually in direct relation to an increase or decrease in money and overall value. Development, however, is more concerned with your business or country’s ability to make money in the future. Development is frequently project-based for this reason. No matter your business’s size or value, knowing how to track economic growth and economic development is a great skill.