This is a great question. There are many variables that need to be considered. So, if you are more specific, then the answer can be more focused. However, there are several considerations that will help you think about this topic.
When you talk about language, it is usually broken down into two areas - reading/writing and speaking. When you talk about literacy, it is only about reading/writing. In light of this, there are a few comments that we can make.
First, speaking is related to literacy in that words are used, but we need to realize that people can be very polished speakers and very intelligent without being able to read or write. This might sound odd in our world, where reading is common, but from a historical pespective, reading and writing were not as common. For example, the great philosopher, Socrates, did not write even one word!
Second, in light of this, we can say that writing and reading will certainly develop a person's use of language, but it does not exhaust it.