The Relationship between Economic Growth and Economic Development: A Regional Assessment in South Africa

  • Daniel Francois MEYER Spiru Haret UniversityFaculty of Economic Sciences and IT, North-West University, South Africa
  • T. M. MASEHLA North-West University, Faculty of Economic Sciences and IT, South Africa
  • Sebastian KOT Czestochowa University of Technology, Poland Faculty of Economic Sciences and IT, North-West University, South Africa


The concepts of economic development and economic growth differ significantly, but are in some instances used as interchangeable notions. It is important for policy formulators and decision makers to understand the relationship between the two. Development strategies should be formulated to achieve sustainable inclusive economic growth and economic development. These two economic concepts influence each other; however, there is limited clarity on the relationship. The aim of the study was to determine the relationship between these in the Vaal Triangle region, South Africa. Economic development is a broad concept and various methods can be used to measure it. For the purpose of this research, an economic development index was developed, which consists of employment, poverty levels and human development index (HDI). This index assists in the measurement of the relationship between economic development and economic growth. A time series econometric model was used to measure the relationship between the two variables. The results indicated that economic development causes economic growth in the long and short run. Therefore, it is important to focus on economic development, through improved HDI, increased employment and poverty alleviation, in order to achieve inclusive economic growth.


[1] Al-Hilani, H. 2012. HDI as a measure of human development: A better index than the income approach? Journal of Business and Management, 2(5), 24-28.
[2] Azam, M., Haseeb, M., Samsudin, S. 2016. The impact of foreign remittances on poverty alleviation: Global evidence. Economics and Sociology, 9 (1), 264-281.
[3] Baltagi, B.H. 2008. Econometric analysis of panel data. 4th Edition. New York: Wiley.
[4] Barker, F.S. 1992. The South African labour market. Pretoria: Van Schaik.
[5] Boushey, H. and Price, C. 2014. How are economic inequality and growth connected?. Washington Centre for Equitable Growth. Date of access: 24 February 2017.
[6] Bucknall, K. 2013. The differences between economic growth and economic development. North Carolina: Boson Books.
[7] Brooks, C. 2014. Introductory econometrics and finance. 3rd Edition. Cambridge: Cambridge University Press.
[8] Byrne, D. and Strobl, E. 2004. Defining unemployment in developing countries: Evidence from Trinidad and Tobago. Journal of Development Economics, 73(1): 465-476.
[9] Cohen, E. 2017 Effect of welfare and employment policies on the correlation between migration and unemployment. Economics and Sociology, 10 (1), 246-264.
[10] Dahlquist, M. 2013. Does economic growth reduce poverty? Stockholm: Sodertorn University.
[11] Dollar, D. and Kraay, A. 2002. Growth is good for the poor. Journal of Economic Growth, 7(3): 195-225.
[12] Ezeala-Harrison, F. 1996. Economic development: Theory and policy applications. United States of America: Greenwood Publishing Group.
[13] Fourie, F.C. and Burger, P. 2009. How to think and reason in Macroeconomics. 3rd Edition. Cape Town: Juta.
[14] Global Insight. 2016. Regional explorer data base. Pretoria.
[15] Haller, A.P. 2012. Concept of economic growth and development. Challenges of crises and of knowledge. Economy Transdisciplinarity Cognition, 15(1):66-71.
[16] Hull, K. 2009. Understanding the relationship between economic growth, employment and poverty reduction. Promoting pro-poor growth: Employment. OECD. Date of access: 3 March 2017.
[17] Islam, S. 2010. The human development index and per capita GDP. Applied Economics Letters, 2(5): 166-167.
[18] Jacobs, G. and Slaus, I. 2010. Indicators of economic progress: The power of measurement of human welfare. CADMUS, 1(1), 53-113.
[19] Kane, M. and Sand, P. 1988. Economic Development: What works at the local level. Washington, DC: National League of Cities.
[20] Khan, H. and Khan, I.U. 2012. From growth to sustainable development in developing countries: a conceptual framework. Environmental Economics, 3(1): 24-25.
[21] Khodabakhshi, A. 2011. Relationship between GDP and human development indices in India. Journal of Trade Economics and Finance, 2(3): 251-253.
[22] Lindbeck, A. 1992. Nobel Lectures, 1996 to 1980. Singapore. World Scientific Publishing Company. Date of access: 23 February 2017.
[23] Loría, E. and Salas, E. 2014. A nonlinear relationship: Unemployment and economic growth (construction sector) in Spain, 1995.1–2012.2. International Advances in Economic Research, 20(4):439-453.
[24] Maddison, A. 1997. Causal influence on productivity performance 1820-1992: A global perspective. Journal of Productivity Analysis, 1(1): 325-360.
[25] Meyer, D.F., De Jongh, J.J. and Meyer, N. 2016. The formulation of a composite regional development index. International Journal of Business and Management Studies, 8(1): 100-116.
[26] Meyer, N., Meyer, D.F. 2016. The relationship between the creation of an enabling environment and economic development: A comparative analysis of management at local government sphere. Polish Journal of Management Studies, 14 (2): 150-160.
[27] Pedroni, P. 2000. Fully modified OLS for heterogeneous cointegrated panels. Advances in Econometrics, 15: 93-130.
[28] Ramirez, A., Ranis, G. and Stewart, F. 1998. Economic growth and human development. QEH Working Paper no 18. Date of access: 2 March 2017.
[29] Rivers, M.A. 2016. The synergies between human development, economic growth, and tourism within a developing country: An empirical model for Ecuador. University of Central Florida. Orlando, Florida (PhD Thesis).
[30] Rynn, J. 2001. The power to create wealth: A system-based theory of the rise and decline of great powers in the 20th century. New York: City University of New York. (PhD Thesis.)
[31] SPII (Studies in Poverty and Inequality Institute). 2007. The measurement of poverty in South Africa project: Key issues. Richmond: SPII.
[32] Steveans, L.K. and Sessions, D.N. 2008. The relationship between economic growth and poverty. Journal of Income Distribution, 17(1): 5-20.
[33] Stiroh, K.J. 2001. What drives production growth. Date of access: 14 September 2016.
[34] Tintin, C. (2009) Testing the Balassa-Samuelson Hypothesis: Evidence from 10 OECD countries. Date of access: 21 February 2017.
[35] Todaro, M.P. and Smith, S.C. 2015. Economic development. 12th Edition. United Kingdom: Pearson Education Limited.
[36] Tondon, S. and Shome, S. 2010. Balancing human development with economic growth: a study of ASEAN 5. Annals of University of Petrosani, Petrosan, 10(1): 335-345.
[37] United Nations Development Programme. (2015) Human development report 2015: work for human development. Date of access: 5 April 2016.
[38] Walterskirchen, E. 1999. The relationshıp between growth, employment and unemployment in the EU. Institute of Economic Research. 6(1).
[39] World Bank. 2001. What is development? Date of access: 23 March 2016.
[40] World Bank. 2014. East Asia and Pacific economic update October 2014: Enhancing competiveness in an uncertain world. Washington DC.
How to Cite
MEYER, Daniel Francois; MASEHLA, T. M.; KOT, Sebastian. The Relationship between Economic Growth and Economic Development: A Regional Assessment in South Africa. Journal of Advanced Research in Law and Economics, [S.l.], v. 8, n. 4(26), p. 1377-1385, dec. 2017. ISSN 2068-696X. Available at: <>. Date accessed: 25 feb. 2024.