Economics · Lesson 20

Economic growth, development & planning

JAMBWAECNECO

What the syllabus asks

JAMB: Economic growth and development: meaning; distinction between growth and development; characteristics and problems of developing countries; development planning in Nigeria (national plans, rolling plans, vision documents); strategies for development

WAEC: Economic growth and development: meaning and distinction; indicators/measurement of development; characteristics of developing countries; obstacles to development; ways of promoting development; development planning – meaning, types, objectives, stages and problems; Nigeria’s development plans

NECO: Economic growth and development: meaning and distinction; indicators/measurement of development; characteristics of developing countries; obstacles to development; ways of promoting development; development planning – meaning, types, objectives, stages and problems; Nigeria’s development plans

What you will learn

Define economic growth and development and distinguish them.
Calculate growth rates, real growth and per capita income and use the rule of 70.
Explain the indicators of development including the HDI.
Describe the characteristics of developing countries and obstacles to development.
Explain strategies to promote development.
Explain development planning: types, objectives, stages and problems; outline Nigeria’s plans.

Key points

Growth: sustained rise in real GDP; growth rate = change ÷ previous × 100.
Real growth ≈ nominal growth − inflation; growth compounds.
Rule of 70: doubling time ≈ 70 ÷ growth rate.
Per capita income = national income ÷ population.
Development = growth + welfare improvement + structural change.
Indicators: GDP per head, HDI (health, education, income), literacy, life expectancy, poverty.
Developing countries: low income, primary dependence, high population growth, low capital, dualism.
Vicious circle: low income → low saving → low investment → low productivity.
Planning: types (short/long, indicative/imperative, rolling), stages, objectives.
Nigeria: plans 1962–68, 1970–74, 1975–80, 1981–85; SAP 1986; rolling plans; NEEDS; Vision 20:2020; ERGP; NDP 2021–25.

Start here: Meaning of economic growth

When newspapers report that "the economy grew by 3% last year", they mean that the total real output of goods and services rose by 3%. That is economic growth.

Economic growth is a sustained increase in the real output of goods and services in an economy over time, usually measured by the percentage change in real GDP.

Growth rate = (real GDP this year − real GDP last year) ÷ real GDP last year × 100.

Worked example 20.1

Real GDP rises from ₦100tn to ₦106tn (illustrative constant-price figures). Find the growth rate.

Change = 6.
6 ÷ 100 × 100 = 6%.

Sources of growth

More factors: more labour, capital, land brought into use.
Better factors: education, health and skills (human capital).
Technology and innovation.
Better organisation and institutions.
Discovery of natural resources.

⚠️ Common mistake: measuring growth with nominal GDP. If prices rise 20% and nominal GDP rises 20%, real output has not grown at all.

Try it yourself. Real GDP rises from 250 to 270. Find the growth rate.

Show solution

20 ÷ 250 × 100 = 8%.

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Practice questions

1. Economic growth is

a sustained increase in real GDP
an improvement in welfare only
a rise in prices
more population

Show answer

A: a sustained increase in real GDP
Measured by the growth rate of real output.

2. Real GDP rises from ₦2,500bn to ₦2,700bn. The growth rate is

20%
7.4%
2%
8%

Show answer

D: 8%
200 ÷ 2,500 × 100.

3. Using the rule of 70, an economy growing at 5% a year doubles its output in about

70 years
5 years
14 years
35 years

Show answer

C: 14 years
70 ÷ 5.

4. Nominal growth is 12% and inflation is 9%. Real growth is approximately

Show answer

B: 3%
12 − 9.

5. Economic development differs from growth because it includes

improvements in welfare and structural change
only rising output
only inflation
only population growth

Show answer

A: improvements in welfare and structural change
Development is broader.

Key words

Economic growth: A sustained increase in a country’s real output of goods and services.
Economic development: A process of growth accompanied by improvements in living standards, structure of the economy and welfare.
Real GDP: GDP adjusted for inflation, valued at constant prices.
Per capita income: National income divided by population.
Human Development Index (HDI): UNDP composite index of health (life expectancy), education and income per head.
Developing country: A country with relatively low income per head and low levels of industrialisation and welfare.
Vicious circle of poverty: Low income → low saving → low investment → low productivity → low income.
Dualism: Coexistence of a modern sector and a traditional sector in one economy.
Development planning: Deliberate government effort to set economic targets and coordinate resources to reach them over a period.
Rolling plan: A plan revised each year, adding a new year as one ends.
Perspective plan: A long-term plan of 15–25 years setting broad goals.
Indicative planning: Planning in which government sets targets and guides the private sector by incentives.

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