Characteristics of economic growth.

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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. It is much easier to achieve a high growth rate in a poor economy than a rich one. For a country with a high standard of living such as USA, even a massive increase in output would represent only a small percentage of GPD. For a rather small economy an increase in income would represent a large percentage increase. Also increases in economic growth need to be weighed against population increase. In poor countries the rate of population growth is enormous, therefore the growth of GDP per capita figures tend to be much more limited than raw output figures and many become negative. This is represented in the table below with some examples of countries.

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Growth of GDP per capita (1985-94)

               Country                       Growth of GDP per capita                   Country                Growth of GDP per capita

        There is a definite connection between the level of countries income and the structure of it’s production. Poor countries tend to have a high percentage of production in the primary sector. When the income of a country increases, the production shifts from the primary sector to the secondary or manufacturing sector and with even higher rise of income the production shifts into the tertiary or ...

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