13/10/ · This essay will provide a unique perspective regarding the impact of economic growth and the importance of economic growth. This essay will also provide the argument of the research found that will provide how economic growth can lead to increased prosperity in the developed, the underdeveloped, and emerging countries.3/5(1) 1/11/ · Economic growth means a rise in real GDP; effectively this means a rise in national income, national output and total expenditure. Economic growth should enable a rise in living standards and greater consumption of goods and services. As a result, economic growth is often seen as the 'holy grail' of blogger.comted Reading Time: 3 mins 21/8/ · Category Economic Growth. Essay type Research. Words. (2 pages) Views. When using the Keynesianism theory of aggregate supply and aggregate demand, economic can be both desirable and undesirable. Firstly, economic growth at its most basic level increases GDP and blogger.comted Reading Time: 4 mins
Economic Growth Essay - Words | Bartleby
Essay 1. Various theories, viewpoints and models have been presented from time to time economic growth essay account for the sources of economic growth and the determinants of economic development. To most people, a theory is a contention that is impractical and has no factual support. For the economist, however, a theory is a systematic explanation of interrelationships among economic variables and its purpose is to explain causal relationships among these variables.
Usually a theory is used not only to understand the world better but also to provide a basis for policy. This essay discusses a few of the major theories of economic development, from which emerged alternative approaches to economic development, economic growth essay.
The earliest students of development economics were the mercantilists. Mercantilists were a group of traders. They believed that exports were always good for a country because exports implied inflow of precious metals such as gold and silver. By contrast, imports were harmful for a country because imports implied outflow of precious metals. So, in their view, growth and development of a nation depended on its accumulation of precious metals.
Essay 2, economic growth essay. The mercantilist view was challenged by Adam Smiththe Father of Economics, in Smith, in his Wealth of Nations, pointed out that the mercantilist view contained a major fallacy. So two trading nations cannot have trade surplus or favourable balance of trade at the same time.
In the late 18th century Smith argued that the true wealth of a nation is not its accumulated gold and silver hut its labour power— the human factor of production. ii The proportion of productive labour in the total labour force i. Smith believed that division of labour, specialisation, and exchange were the true springs of economic growth. Smith argued that in a market-based competitive economy, with no collusion, cartel or monopoly, each individual, by acting in his her own interest, promoted the public interest, economic growth essay.
A producer who charges more than others will not find buyers, a worker who asks more than the going wages will not get job, and an employer who pays less than the market wage i. It was as if an invisible hand were behind the self-interest of capitalists, merchants, landlords and workers, directing their actions toward maximum economic growth.
So Smith advocated a laissez-faire non-interference of government in economic matters and free trade policy as two growth-promoting measures.
Essay 3. The Classical Theory of Economic Stagnation : The classical theory, based on the work of David Ricardohad a pessimistic view about the possibility of sustained economic growth. For Ricardo, who assumed little continuing technical progress, growth was limited by scarcity of land.
A major tenet of Ricardo was the law of diminishing returns. For him, diminishing returns due to population growth and a fixed supply of land threatened economic growth. Since Ricardo believed that technical change or improved production techniques could only temporarily avert the operation of the law of diminishing returns, increasing capital was seen as the only way to offset this long-run threat.
However, any fall in the rate of capital accumulation would lead to eventual stagnation. Ricardian stagnation might result in a Marxian scenario, in which wages and investment would be maintained only if property were confiscated by society and payments to private capitalists and landlords stopped. Essay 4. Marx predicted that the capitalist system would in the initial stage grow due to increased profit surplus value which was the result of exploitation of labour and would provide funds for accumulation.
But since wages were pegged economic growth essay the subsistence level, due to the existence of a huge reserve army of unemployed, the capitalists would suffer from a realisation crisis. They would not be able to realise the profits embodied in already produced goods. And, according to Marx, the under consumption of economic growth essay masses is the root cause of all crises. Marx, in fact, made certain predictions about the growth, maturity and stagnation of capitalism, economic growth essay.
He economic growth essay that the capitalist system would ultimately collapse for want of markets and would yield place to socialism.
Unfortunately, economic growth essay, history has not obliged Marx. The year saw the collapse of socialism especially in erstwhile USSR and its satellite countries and with it the abandonment of the centralised planning system and the emergence of newborn post-socialist countries.
Essay 5. Rostow sets forth a new historical synthesis about the beginnings of modern economic growth on six continents. The most important stage is the third one, i. Many underdeveloped economic growth essay reached the stage later mainly under the influence of planning.
Essay 6. The vicious circle theory presented by Ragnar Nurkse in his book- The Problems of Capital Formation in Underdeveloped Countries, indicates that poverty perpetuates itself in mutually reinforcing vicious circles on both the supply and demand sides.
In fact, low per capita income is both the cause and the effect of poverty. At low levels of income, people cannot save much. Shortage of capital leads to low productivity of labour, economic growth essay, which perpetuates low levels of income. Thus the circle is complete, as shown in Fig. A country is poor because it was previously so poor that it could not save and economic growth essay. In short, various obstacles to development are self-enforcing.
Low levels of income prevent saving, retard capital growth, hinder productivity growth and keep income low.
Successful development may require taking steps to break the chain at various points. By contrast, as countries get richer they save more, creating a virtuous circle in which high sayings rates lead to faster growth.
A country is rich because it was rich in the past. Or a rich country is likely to become richer in the future. In addition, due to the narrow size of the domestic market for light consumer goods such as shoes, textiles, radio, etc.
there is hardly any incentives for potential entrepreneurs to investment. Lack of invest means low factor productivity and continued low income. A country is poor because it was so poor in the past that it could not provide the market to spur investment.
Essay 7. Balanced Vs. A major debate in the areas of development economics from the s through the s concerned balanced growth versus unbalanced growth. The term balanced growth has been used in different senses. The meaning of the term may vary from the absurd requirement that all sectors grow at the same rate to the more sensible plan that a minimum attention has to be given to all major sectors—industry, economic growth essay, agriculture, and services.
The main advocate of the doctrine of balanced growth was Economic growth essay. To him, balanced growth means the synchronized application of capital to a wide range of different industries. Nurkse economic growth essay this strategy as the only escape route from the vicious circle of poverty underdevelopment. The advocates of the Nurkseian doctrine support the big push thesis, arguing that a strategy of gradualism is bound to fail.
A substantial effort is needed to overcome the inertia inherent in a stagnant economy. According to Paul N.
Rosenstein-Rodanthe factors that contribute to economic growth—such as demand and investment in infrastructure—do not increase smoothly but are subject to sizable jumps or indivisibilities. These indivisibilies result from flows created in the investment market by external economies positive externalitieseconomic growth essay, that is, cost advantages enjoyed by one firm due to output expansion by another firm, economic growth essay.
These benefits spillover to society as a economic growth essay, or to some members of it, rather than to the investor concerned. This means that the social profitability of this investment exceeds its private profitability. For Rosenstein-Rodan, a major indivisibility is in infrastructure, such as power, transport and communications.
This basic social capital reduces costs to other industries. The indivisibility arises from the interdependence of investment decisions; that is, a prospective investor is uncertain whether the output from his investment projects will find a market. Complementary demand reduces the risk of not finding a market, economic growth essay. Reducing interdependent risks increases the incentive to invest. Hirschman develops the idea of unbalanced investment to complement existing imbalances.
In his view, deliberately unbalancing the economy, in line with a predesigned strategy, is the best path for economic growth. He argues that the big push theory cannot be applied economic growth essay less developed countries LDCs because they do not have the skills needed to launch such a massive effort. The scarcest resource in LDCs is the decision-making input, i. Economic development is held in check not by shortage of savings, but by that of risk-takers and decision-makers. He suggests that since physical resources and managerial skills and abilities are scarce in LDCs, a big push is economic growth essay only in strategically selected industries within the economy.
However, it is not in the Tightness of things economic growth essay leave investment decisions solely to individual entrepreneurs in the market. The reason is that the profitability of different investment projects may depend on the order in which economic growth essay are undertaken. However, if the car factory is set up first, its return is likely to be low due to shortage of steel. This means that society would be better off investing in the steel plant first and the car factory next, rather than making independent decisions based on the market.
So planners and policy-makers need to consider the interdependence of one investment project with another so that they maximise overall social profitability. They need to make that investment which promotes the maximum investment. Investment should be concentrated in those industries which have the strongest linkages—both backward to enterprises that sell inputs to the industry and forward to units that buy output from the industry.
The steel industry, for instance, may be accorded the maximum priority by the planners because it has backward linkages with coal and iron ore industries, and forward linkages with car and engineering industries.
So there is need for making public investment in steel industry which has a strong investment potential in the sense that it is likely to spur private investment. Similarly, public investment in power and transport will increase productivity and thus encourage investment in various other industries. One main drawback of unbalanced growth approach is that it fails to stress the importance of agricultural investments.
According to Hirschman, agriculture economic growth essay not stimulate linkage formation so directly as other industries. However, empirical studies indicate that agriculture has substantial linkages to other sectors.
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, time: 24:50Economics Essays: Importance of Economic Growth
13/10/ · This essay will provide a unique perspective regarding the impact of economic growth and the importance of economic growth. This essay will also provide the argument of the research found that will provide how economic growth can lead to increased prosperity in the developed, the underdeveloped, and emerging countries.3/5(1) 22/7/ · This essay argues that growth output alone is not sufficient for poverty alleviation; ether complementary measures and policies need to exist to create sustainable pro- poor growth. The essay has been organized as follows: First, the analytical debate on the correlation (or the lack of it) between economic growth and poverty reduction will be blogger.comted Reading Time: 8 mins 17/12/ · Economic growth is the positive change in the real output of the country in a particular span of time while economic development involves a rise in the level of production in an economy along with the advancement of technology, improvement in living standards and so on
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