Abstract. There is a close relationship between economic development and economic growth. At the modern stage, it is economic development that determines the features of economic growth. Economic development provides unprecedented opportunities for economic growth. But, at the same time, economic development should be aimed at reducing growth rates. We call this act of economic development "economic decline", the paper substantiates that economic decline is a concomitant process of economic development and that it is a progressive event, since under such conditions both the level of well-being and the prosperity of the country increase. This is made possible by the use of modern cutting-edge technologies, reduction of material and energy capacity, improvement of consumer properties of products and other qualitative changes in the economy.

Key words: economic development, Economic Growth, economic decline 

Economic development and economic growth 

Researchers in post-communist countries, including Georgia, have so far paid much more attention to economic growth than to economic development. And this is only natural because until recently the changes associated with economic development occurred very slowly, almost imperceptibly, and their analysis was much more difficult. It is no accident that before the emergence of postindustrial society there was a similar situation in the developed countries as well. True, in studying economic growth researchers sometimes also considered qualitative changes in the economy, or economic development.

The term “economic development” is often identified with the name of an educational discipline taught at colleges and universities throughout the world. As a discipline, “economic development” mainly relates to the economy of developing countries. But economic development takes place under any economic system and in countries at any level of development. The only significant difference lies in its goals and objectives.

Another frequently used term is “development economics,” which also seems incorrect because it refers not to problems in the development of the economic system but to the economic problems of the development of something (no one knows what exactly).

In the economic literature, the very essence of economic development is under-researched, as well as the interdependence of economic development and economic growth, the factors and indica tors of economic development, etc.

Since we are used to focusing on quantitative rather than qualitative economic indicators, the concept of “economic development” is often confused with the concept of “economic growth.” As noted above, such was the state of affairs throughout the world until the economy of the developed countries entered the phase of post-industrial development.

The difference between these two categories lies in the very meaning of the words that express them. The word “growth” means an increase in some quantity over time, a quantitative increase. Thus, it refers only to quantitative changes in an object or phenomenon. As for “development,” this word means the transition of something from one state to another, more perfect state. Consequently, it reflects a mostly qualitative change in an object or phenomenon toward greater perfection. One may conclude that economic growth means a quantitative increase in the size of the economy, while economic development means an improvement in the economy, a transition to new properties. The field of transport can be used as a clear, primitive example of the difference between these two processes. Quantitative growth is reflected in the number of vehicles today and in the past (which is incomparably greater today), and the development, in their types and characteristics in the past (carriages, carts, wagon, etc.) and today (cars, trains, ships, airplanes, spaceships, etc.) [Шумпетер Й. 2007].

In the literature, economic growth in its broad sense implies qualitative growth as well. Such an expansive interpretation is dictated by a desire to invest this term with greater meaning. But there is no point in using the concept of economic growth in this broad sense: after all, there is a more suitable term – economic development – for expressing qualitative improvements in the economy.

This does not mean that there is no deep-rooted connection between economic growth and economic development. The very fact that quantitative changes eventually transform into qualitative changes indicates that economic growth is one of the factors of economic development. For example, the emergence of a post-industrial economy would have been impossible unless the world had first reached a certain level of industrialization. For its part, economic development creates unlimited conditions not only for qualitative improvements in the economy, but also for its further growth. However, economic growth can also occur without economic development, as under extensive growth of production factors. A case in point is the functioning of economic systems in pre-industrialization eras. Special mention should be made of the traditional economy: for thousands of years, its size grew almost without economic development. Yet in the final analysis the unprecedented acceleration of economic growth nevertheless occurred as a result of economic development.

For its part, economic development is possible without economic growth and even during an economic recession. Take the process of economic transformation (qualitative improvement of the economy) in most post-industrial countries that took place during an economic recession. Economic development without economic growth can occur in developed countries because population growth rates in these countries are low and living standards can rise due only to the use of the latest technologies, a reduction in the material and energy intensity of products, an improvement of their consumer properties, and other qualitative changes. But this relationship will not last for long: in the longer term, economic development will inevitably be followed by economic growth, and vice versa. Consequently, in the long-term perspective economic development and economic growth do not exist without each other.

Economic development is accompanied by changes in the economic system, which itself is based on the set of its components. These are forms of ownership, physical and human capital (and factors of production in general), technology, information and institutions. All of them are present under any organizational structure of the economic system. But under each of these structures their role and importance are different. Under “pure” capitalism, for example, economic relations are determined by physical capital; in a mixed economy, by human capital; and in a traditional economy, by institutions.

In the process of economic development, progressive changes occur precisely in the elements of the economic system, and this is reflected in the quantitative and qualitative characteristics of the economy. The main driving force behind this development is the irresistible desire of people for greater satisfaction of their spiritual and physical needs. The necessity to improve the economic sys- tem is also dictated by the fact that economic resources are limited while human needs are unlimited. The scarcity of economic resources necessitates their ever more efficient use, and also their preservation for the benefit of future generations.

If various elements of the economic system change simultaneously, this produces a synergistic effect, which accelerates the economic development process. And if tensions arise between various elements, this calls for a change in the organizational structure of the whole economic system, which may be either revolutionary (abrupt) or evolutionary (gradual). In the first case, there are rapid changes in elements of the economic system, followed by an equally rapid change of the social order (as in the transition from feudalism to capitalism). In the second case, changes occur gradually and the social order changes imperceptibly though significantly (as in the transition from industrial to post-industrial society). In both cases, we get a qualitatively new state of the economy that provides opportunities for faster economic development. New forces come on the scene, accelerating the economic development process still further. As a result, we have to deal with qualitatively new forms of ownership, physical and human capital, technologies, institutions, etc.

Economic development is a major factor in economic growth but it, together with ecological requirements, is directed  slowing economic growth, stipulated by the following:

1. Competition provides for entrepreneurs to increase productivity and cheapen the products (innovative policies of the state is the same), thus reducing production growth rates in value form. For example, the cost of a computer has been decreasing by 10 percent every year since 1981 [Olivier Blanchard… 2010];
2. The physical characteristics of the product shall also be changed in the manufacturing process. The weight of the finished products becomes more "light" (for example, replacement of metal details with plastics details, etc.), which also reduces product growth rates in value form;
3. In many cases the quantitative decrease of certain items of production takes place (the xerox, the scanner and the printer combination, and many others) which, naturally, will be reflected in the reduction of gross domestic product value;
4. Restriction of existing resources requires nonrenewable sources to be used rationally so that we can keep them up for a long time (material - and capital-intensive, energy-intensive reduction, etc.) The use of computer significantly decreases amounts of resources used in many fields of human activity (state and civil registry, libraries, archives, etc.), which is also reflected on the reduction of GDP value;
5. Sustainable economic development, or interconnection of society with the nature requires economic growth to comply with the ongoing reproduction processes in nature, which is still significantly disrupted and has caused many negative problems of global character. Obviously this demand is also directed towards reducing economic growth rates;
6. Economic development when strengthening emancipation of women reduces birth rate and therefore, the rate of population growth;
7. A small part of the funds flows into the protection of nature, which also reduces ecological growth rates.

Therefore, the reduction of economic growth rates can also be caused by the acceleration of economic development, and it can’t be considered as a negative issue, since under these conditions, both, are the levels of well-being (increasing the comfortableness of life) and the strength of  country (for example, the military strength increases with the usage of qualitatively new weapons that replace many old ones), the expensive weapons are removed from the arsenal, new, which are more progressive and in the same time cheaper means and forms of combat are recognized).

In that case, the increase of living standards of people and  strengthen of  country occurs as a result of usage of the latest, modern technologies, reduction of materials and energy capacity, improvement of consumer properties of products and all other qualitative changes..         

The slowing down of economic growth caused by economic development can be called "economic decline", which is fundamentally different from "economic reduce", since the latter is caused by crisis, negative processes (which is leading to negative results), and the former, by positive processes (which increase the comfortableness  of  population and  strengthen  the country’s leading potential). Therefore, to assess the real picture of economic growth, it is necessary to adjust it in the direction of the whole growing process. But it is not possible to measure it precisely, in quantitative terms, since it is related to qualitative changes in economy. So, to assess the current situation in the economy, it is necessary to use the qualitative indicators. For example: change of ownership forms; introduction of new technologies; restructuring of enterprises; privatization of enterprises; reconstruction and re-equipment of enterprises; institutional changes; specific share of investments made on innovation in the total number of investments; the specific share of spending on education in the gross national product; the specific share of expenses that are spent on the development of science in the total national product; the level of educational system; progressive structural changes; freedom of business, trade, investment; protection of owner's rights, etc. [Abesadze R.] 

Reference

1. Abesadze R. 2014. Economic Development and Economic Regress. Tbilisi, "Publishing House of TSU Paata Gugushvili Institute of Economics" (in Georgian).
2. Шумпетер Й. 2007. Теория экономического развития. М. "Эксмо", 2007.
3. Olivier Blanchard, Alessia Amighini, Francesco Giavazzi. 2010. MACROECONOMICS. A EUROPEAN PERSPRCTIVE,  617 pages https://faculty.ksu.edu.sa/sites/ default/files/macroeconomics_olivier_blanchard.pdf