The focus of this research is the actual economic development of Arunachal Pradesh prior to 2021. The research has a three-fold focus: (a) the nature of the economy at the sectoral level; (b) the level of economic development across districts; and (c) the factors that are empirically found to promote economic development. The research uses secondary data that is collected from official sources such as NITI Aayog, Reserve Bank of India (RBI), and the Ministry of Statistics and Programme Implementation (MOSPI) in order to identify changes in GSDP at constant prices, contributions of sectors to the economy as a whole, and per capita income. It also employs an econometric framework to measure the impacts of the infrastructure, amount of public resources expended, and output by sectors. The research determined that there has been moderate but steady real economic growth in the state due to the service sector growing as a whole and due to a combination of increased investment by the state in the form of public investment. However, major inter-district differences and industrial structure impediments continue to exist. The research concludes by offering viable policy alternatives to promote sustainable and inclusive economic growth in Arunachal Pradesh.