Paper Topic:

The pursuit of economic growth is not in people’s long-term interest. To what extent do you agree or disagree with this statement. Discuss.

The pursuit of economic growth is not in people 's long-term interest . To what extent do you agree or disagree with this statement ? Discuss

Introduction

Economic growth refers to the increase in value of the goods and services produced by an economic unit .1The percentage increase in real Gross Domestic Product (GDP ) serves as a conventional measure of economic growth of a particular entity during a particular period of time . Stokey notes the main objective for basing the calculation of economic growth in real terms is to net out the effect of

inflation on the value of the goods or services produced by a particular entity during a particular period of time .2 Factors such as levels of unemployment , rate of inflation and Gross Domestic Product are key determinants in the measurement of economic growth . In the field of economics , economic growth is viewed in relative terms with reference to the realisation and expansion of potential output which is caused by increase in observed output or aggregate demand

The subject of economic growth is viewed both in terms of short-term interests and long-term interests . While short-term economic interests are often focused towards economic stabilisation , long-term economic interests are often focused towards future growth and expansion . Stokey reckons that the analysis of short-run variation of economic growth is usually based on business cycle given that periodical recessions are always bound to occur in economies at one time or another .3 However the analysis of business cycle is a tricky affair because of the unpredictable nature of fluctuations . Some obvious causes of recession include devastating events such as persistent droughts , wars and oils shortages

The aspect of long-term interest in economic growth forms the central objective of economic studies . Long-term economic growth is usually analysed in regard to GDP because an increase of a country 's GDP is in itself an indication of increase of the standards of living of its population .4 According to Jones the real GDP per capita of a country is the relative indicator of the living standards of the people living in that country .5 Therefore , economic growth is usually considered as an indicator for improvements in living standards of a population during a particular period of time . According to the arguments advanced by the premise of exponential growth , small rates of minimal rates of annual growth accumulate over time to produce a compounding effect in the overall economic growth of a country . Jones identifies that while a growth rate of 2 .5 percent per annum would double GDP within a period of 28 years , a growth rate of 8 percent per annum would double the GDP within a period of 9 years .6 According to Jones this particular trend of exponential effect demonstrates why differences occur in the annual economic growth among different countries over time . The higher the economic growth percentage in a country , the higher the multiplicity rates over time thus the higher the grid of development .7 As a result many governments all...

11 pages

87.5 KB

Free sing-up