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The Western Path to Development: Economic Growth - Essay Example

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ECONOMIC GROWTH Instructor Institution Date Introduction Economic growth is the measure of how an economy’s production increases when one period is compared with a previous one. Most economists argue that the advantages of economic growth outweigh the disadvantages…
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The Western Path to Development: Economic Growth
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Download file to see previous pages Various nations in the world have different levels of economic growth. This is illustrated by the fact that the living standards of people within developed economies are better than that of the developing economies. Economic growth generally enables a country to be able to meet the needs and wants of the society by providing it with sufficient goods and services at an affordable cost. This paper describes economic growth as a good thing with analytical discussion of its advantages and disadvantages in relation to the party that benefits from the growth and the manner in which this growth is experienced. Indicators of Economic Growth In the modern world and economy, economic growth is characterized by advancement, adoption and application or technology in production of services and goods within sectors of a specific economy. For example, the use of technology and the internet in the US has facilitated production and thus making it one of the most developed countries in the world. According to Sachs (2005, p. 9), the concept of economic growth has two major dimensions. These are the increased capacity of an economy in the production of services and goods and enhancement of living standards and thus improved quality of life within the society. The indicators of economic growth within a country include an increased gross domestic product (GDP) and individual income. However, it should be noted that economists calculate economic growth rate by comparing the changes in GDP between periods of time. Donaldson (2008, p. 2128) asserts that it is through measuring the production of goods and services that economic growth of a country is determined. Therefore economic growth does not necessarily imply that it is a positive growth because it could be negative. When the growth of a country’s economy decreases, it is said that a negative economic growth has been experienced while an increase in productivity means that a positive growth of the economy is felt. Economic recession or depression is the characteristic of a negative economic growth which means that a country is unable to adequately meet the needs for goods and services of individuals and groups within the society. Sinha (2005, p. 25) points out that the growth in GDP within a country means that its economy is facing a positive growth and this is beneficial to three parties. Firstly, a positive growth in the economy benefits the people within the county by for example reducing poverty and thus improving the living standards. Secondly, the country as a whole benefits because a growing economy attracts foreign investment and leads to growth of its industries and infrastructure. The world economies also gain from the growth of a country’s GDP as illustrated by the economic exchanges during the importation and exportation of goods and services among countries. Decancq, Decoster and Schokkaert (2008, p. 11) explain that the globalization of the world economies links regions and as a result the economic growth of one country or region benefits other regions in terms of the goods and services that they are enabled to enjoy from the production of the grown economy. Advantages of Economic Growth Through an increased production of goods and services in an economically growing country, the living standards of the society are improved significantly. Donaldson (2008, p. 2132) emphasizes that it is through an increase in the earnings or income of people within the society that their living standards are improved. This reveals ...Download file to see next pagesRead More
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