Long-run U.S. Economic Growth - Essay Example

Download file to see previous pages... Real GDP moves around the potential GDP. This is how GDP can be measured from the supply side. Again from demand side perspective GDP is determined by total consumption, investment and government expenditure in a closed economy and by an additional component called net exports in open economy. It has been statistically proven that industrial growth of a nation is closely associated with GDP growth. Also, industrialization forms the platform for structural changes in imports and exports. The economic developments underwent by the United States exemplifies how an underdeveloped economy could grow into an immense and affluent industrial state and show remarkable economic growth despite being intervened by short term downs. In more developed economies labor force seems to be distributed more towards the industrial and services sector and importance of agriculture is lessened (Cypher and Dietz, 272). After gaining independence along with 13 colonies, they came together to collaborate into a nation of 4 million people. During 1790, four fifth of the labor force in US belonged to the farm while the capital goods and technology along with finished products were imported from overseas. At present the major part of the nation belongs to the industries with more than 170 million people who are generating their own capital and technology in a society which is persistently expanding. It might be important to state that if supply of labor was the key to industrial growth, then other countries with high population like China and India could show similar levels of improvement. United States possessed several natural advantages for this growth to be sustained. Some of these were derived from the natural situation of the country. The nation had fertile lands and immense natural resources. The climate supported health and generated energy. There was no problem of overpopulation or pressure on existing resources and on the other hand, this scarcity also promoted growth and development as it necessitated economic growth. The population was advanced in terms of culture, moral and political status. Most of them were literate and understood the law and adept in of self-government. The legacy of Calvinism enforced the resolution to earn and save and also democracy brought about an ability to consume as well as enjoy. All these factors combined made economic growth irresistible. Thus work, democracy, innovation and education made a combined effort towards taking the economy along the path of growth. The labor force was committed to work such their earnings went beyond subsistence and devoted long labor hours. The ex-colonies decided to amalgamate after independence and this led the growth of an internal market which provided stimulus to economic growth. Social mobility was utilized to serve as a tool for growth. The urge to be involved with new materials, technologies, machines all contributed towards different methods for improvement (Harris, 3). Again their devotion towards expanding the education base promoted learning and improvement of human resources with time. All these factors combined to rebuild the continent from the colonial status and pushed it into the current stage of growth and development. Overview of Economic Growth in the late Eighteenth and Nineteenth century Net National Product of a country normally serves as a convenient measure of the ...Download file to see next pagesRead More