Economic growth and economic development: Case of Georgia (Republic of)

The phenomenon of economic growth is not a new issue in economic theory and practice. From the very beginning of economic activity of people it was the center of attention of societies for very simple reason: the results of economic growth are reflected in the development of the country and rising living standards, and factors stimulating growth are the object of research for economists.

The economic development is a relatively new concept and is much wider than economic growth. Therefore, first of all, it is important to distinguish between economic growth and economic development. The first implies the development of economy from the standpoint of development of its industrial (manufacturing) potential, and the second emphasizes the social results of development of the economy (real income per capita, the standard of living, education level, level of public health, and observance of environmental standards.

What is the difference between economic growth and economic development? By which indices can they be assessed? Is it possible to consider the model of economic development in the analysis of transitional countries (like Georgia), or it is characteristic only of the countries with emerging countries? These questions are not rhetoric and solutions so far have not been identified. Economic development to a certain degree is determined by: level of infrastructure; efficiency of service sector; low level of corruption; mobility of labor force; flows of foreign investments and foreign aid; level of savings and investments etc.

Study of the transitional period in Post-Communist countries (Georgia) in the above-mentioned context is a very real problem in economic theory. The analysis of the recent two decades explicit shows that the correlation between economic growth and economic development is very fragile.