We often use the words growth and development as if they meant essentially the same thing. But this may not always be the case. One can easily imagine instances in which a country has achieved higher levels of income (growth) with little or no benefit coming to most of its citizens (development). In the past, most development policies were aimed increasing the growth rate of income per capita. Many still are, based on the theory that benefits of economic growth will come to all members of society. If this theory is correct, growth should promote development. By the early 1970s, however, the relationship between growth and development was being questioned. A major study by the World Bank in 1974 concluded that it is now clear that more than a decade of rapid growth in underdeveloped countries has been of little benefit to a third of their population. The World Bank study indicated that increases in GNP per capita did not promise important improvements in such development indicators as nutrition, health, and education. Although GNP per capita did indeed rise, its benefits come down to only a small part of the population. This realization gave rise to a call for new development policies. These new policies favored agriculture over industry, called for domestic redistribution of income and wealth, and encouraged programs to satisfy such basic needs as food and shelter. In the late 1970s and early 1980s, the international macroeconomic crises of high oil prices, worldwide recession, and third world debt forced attention away from programs designed to get rid of poverty. However, the lesson remains: economic growth does not promise economic development. Efforts may be required to change growing output capacity into economic benefits that reach most of a nation's people. According to the study by the World Bank in 1974,economic growth in some background countries brought
benefit only to a third of their population. almost no benefit to a third of their population. little benefit to their people. no benefit at all to their people.