Why Economies Grow - Essay Example

Download file to see previous pages... Any country is said to be developed if the demand & supply chain of that country show that there is more supply of goods than demand by the market. Many factors count in this regard, the natural resources according to the geography, manufacturing, distribution, consumption, exchange medium etc. All these factors set the constraints & parameters in which the economy of any country works & may or may not flourish. All activities happening in a country also account for its economic growth. The occupations, education, business & investments are the basic pillars upon which the economy stands. The greater amount of people a country produce as literates or skilled workers, the more productivity will increase & the economy will grow. More the resources are being used by the government for its people, the less will be the demand & ultimately the economy will boost. Any country’s economy initially depends upon the extraction of natural resources like iron, coal, oil & gas, petroleum etc, then these are transformed from raw structure to products like machines, furniture, clothes etc, then these products are supplied to consumers along with the personal services provided by skilled workers. Finally economy depends upon the private & public sector facilities which include hospitals, transports, libraries, institutes etc. All these factors play their parts in the growth of any state’s economy. Overall, the size of economy of any country is determined by the Gross domestic product GDP & GDP per capita of that country, which only includes such economic activities in which the money is exchanged. The living standards in a particular state are measured through GDP per capita & every change in GDP indicates a change in the living standards. Economic growth is defined as the “increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs including labor, capital, material, energy, etc for a given amount of output”. (Kendrick, John W.1961). In his famous book Why Economies Grow, Jeff Madrick argued that market growth through trade & expansion is the biggest factor of economical development. He also said that technological advancement is not the cause of economical growth in developed countries, rather it is an effect caused by the economical revolution during the mid of 20th century. The economic growth also generates such resources which improvise the social services sector which includes healthcare, safety, good infrastructure, education etc. Such kinds of resources diminish the affects of unequal distribution of income in the society & are equally distributed amongst the whole population. Hence every individual can take benefit from it. The healthier & stronger a nation, stronger will be the country & the economy will get more stable. Such resources increase the living standards of the general public & thus human development propels economic development of a country. If there is an increase in average income, it leads to proper use of social services provided thus building a healthy & prosperous nation. On the other hand, if poverty is reduced, there will be more use of social services & more population will enjoy their benefits. Economic growth is often related to Economic Freedom, which offers a surviving Hope to Countries which are struggling with poverty & other severe issues. Such countries must develop such policies by which economic growth will increase & then they have to go on the subject of health & food. The policies may include economic freedom in which citizens are allowed to make their own economic policies without the interference of ...Download file to see next pagesRead More