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Characteristics of economic growth.

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Introduction

Olga $. 10.02.03 Mr. Buckley 11 Economics Characteristics of economic growth Economic growth is when an increased output of a nation of goods and services available to satisfy the material wants of the people. It is also defined as the increase in real GDP per capita, aver a certain time period, usually one year. Historical evidence may help to identify the requirements necessary for process of growth. In major study on the causes of economic growth, Professor Simon Kuznets identified characteristics which were found in each of the present day developed countries during their own periods of time. Those will be discussed in this essay. Economic growth can change a lot over time and between countries. This can be seen in the table below which shows a variation between a selection of countries, by showing the average annual growth rate of the decade between 1980 and 1990. Economic Growth Rates Total GDP will double in seven years with a growth rate of 10%, where the differences in growth rates can open up wide differences in income and wealth between economies. ...read more.

Middle

Structure of Production (1990) Per capital GDP Distribution of GDP % Country Agriculture Industry Services Tanzania 110 59 12 29 Somalia 120 65 9 26 Uganda 220 67 7 26 Peru 1,160 7 37 57 Thailand 1,420 12 39 48 Argentina 2,370 13 41 45 Australia 17,000 4 31 64 Germany 22,320 2 39 59 Japan 25,430 3 43 56 The production on the land is very low in the LDCs, yet many more people work in live in the rural sector, than the GDP distribution percentages suggest. All in all, 66% of people from LDCs live in rural sector whereas only 27% of MDCs live in it. In LDCs countries primary exports form the major source of foreign exchange earnings. As the economies in the world grow, the percentage share of primary products in total world trade falls, such in 1950 there was 33% of total, and by 1986 fall to 23%. Primary products are income inelastic. ...read more.

Conclusion

Rapid growth coming from increase of production, longs for further economic research for growth and change, which brings further growth. Shown underneath. 1. Growth Research + Development When the rate of production grows it raises the incomes, which then raises the demand for goods and services. <this makes markets grow and develop further. Seen below. 2. Growth Raises incomes Stimulates Markets Raises Demand When incomes rise, the growth for income-elastic industrial products grow faster. Therefore the demand for inelastic agricultural goods rise as well. This causes the production move from the farm to the factory. As people move from rural living to urban living, which brings up urbanisation. Causing breakdown of Traditional Values. 3. Growth Demand for Industrial Goods rather than Agricultural Breakdown of Traditional Values Industrialization & Urbanization All these characteristics are inter-dependant and self-reinforcing. Growth is an important target, since it enables development. Economic growth can create resources witch can reduce poverty. Economic growth raises the standard of living. All the facts above show us the characteristics of economic growth. This shows once more the importance of economic growth for this world's economies. 1 ...read more.

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