Economic development is defined as a structural transformation in the economy or, alternatively, as a transformation in the type of social processes that prevail within a given social formation such that it is possible for more output and/or surplus value to be generated over time. Thus, economic development and economic growth are linked, although not the same thing. Economic growth can occur in the absence of economic development, but economic development is assumed to generate economic growth.

Social processes that generate economic growth at a given period of a social formation's history may at a later stage result in economic stagnation (relatively static levels of output and/or social surplus) or economic decline (a significant decline in levels of output and/or social surplus). Thus, continuous economic development may require successive stages within which new combinations of social (economic, political, cultural) processes are brought into existence, with each stage consistent with a new burst of economic growth. The ability of a social formation to produce such successive stages of transformation are problematic, since there seems to be a tendency towards conservatism in institutions within societies, especially (but not only) those that have been successful in the recent past. Indeed, it is common in many societies for there to be enormous resistence to change without major crises acting as catalysts (including such crises as internal revolutions or external wars). It is possible that the institutions of a society may be such that the transformation necessary to generate future growth are stymied, even after several successful stages of economic growth have been generated by the same institutions. This could lead analysts to the conclusion that it is not possible for any society to achieve continuous economic development over a long historical period.