explain the factor that promote growth of nation
Answers
Answer:
nization
Types of Economic Growth
1. Boom and Bust Business Cycles
2. Export-led
3. Consumer
4. Commodity Exports
Costs of Economic Growth
1. Environmental Costs
2. Rising Income Inequality
Economic Growth Definition
The economic growth of a country is the increase in the market value of the goods and services produced by an economy over time.
We define economic growth in an economy by an outward shift in its Production Possibility Curve (PPC). Economic growth is measured by the increase in a country’s total output or real Gross Domestic Product (GDP) or Gross National Product (GNP).
The Gross Domestic Product (GDP) of a country is the total value of all final goods and services produced within a country over a period of time. Therefore an increase in GDP is the increase in a country’s production.
Growth doesn’t occur in isolation. Events in one country and region can have a significant effect on growth prospects in another. For example, if there’s a ban on outsourcing work in the United States, this could have a massive impact on India’s GDP, which has a robust IT sector dependent on outsourcing.
Most developed economies experience slower economic growth as compared to developing countries. For example, in 2016, India had a growth rate of 7.1% while the American economy was only growing at 1.6%. This statistic can be misleading because India’s GDP was $2.264 trillion in 2016, while the US was $18.57 trillion. It would be more appropriate to compare their economic growth rates during similar periods in their history.
India GDP Growth Rate
Economic Growth is not the same as Economic Development. Economic Development alleviates people from low standards of living into proper employment with suitable shelter. Economic Growth does not take into account the depletion of natural resources which might lead to pollution, congestion & disease. Development, however, is concerned with sustainability which means meeting the needs of the present without compromising future needs.
Why is Economic Growth Important?
Economic growth is one of the most important indicators of a healthy economy. One of the biggest impacts of long-term growth of a country is that it has a positive impact on national income and the level of employment, which increases the standard of living. As the country’s GDP is increasing, it is more productive which leads to more people being employed. This increases the wealth of the country and its population.
Higher economic growth also leads to extra tax income for government spending, which the government can use to develop the economy. This expansion can also be used to reduce the budget deficit.
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