1. Unit 4: Economic Growth Pg

2. Economic Growth 4.1 Meaning & How to calculate economic growth.
4.2 The Importance of achieving economic growth.
4.3 Strategies which could be employed to achieve economic growth:
Macro Strategies (Fiscal & Monetary Policies)
Micro Strategies (Encourage Business to produce more output at faster and cheaper rates)
4.4 Constraints on Economic Growth
4.5 South Africa’s recent growth experience (pg. 168)

3. Economic Activity is expressed as Total Output = GDP
Economic Growth
Economic Growth: refers to the changes in the level of economic activity over a period of time.
Economic Activity is expressed as Total Output = GDP
To determine economic growth year-on-year we have to calculate the percentage change in GDP…
HOW?
Method 1: (GDP in year 2 - GDP in year 1)/Year 1 x 100
Method 2: ((GDP in year 2 / GDP in year 1) - 1) x 100
* Please note the mistake in the text book

4. Economic Growth
Calculate the econmic growth in 2014 and 2015 for countries A and B:
Method 1: (GDP in year 2 - GDP in year 1)/Year 1 x 100
Method 2: ((GDP in year 2 / GDP in year 1) - 1) x 100
Country Name
GDP: 2013
GDP: 2014
GDP: 2015
Country A
$ ,00
$ ,00
$ ,00
Country B
$ ,00
$ ,00
$ ,00

5. Economic Growth
Calculate the econmic growth in 2014 and 2015 for countries A and B:
Method 1: (GDP in year 2 - GDP in year 1)/Year 1 x 100
Method 2: ((GDP in year 2 / GDP in year 1) - 1) x 100
Country Name
GDP: 2013
GDP: 2014
GDP: 2015
Country A
$ ,00
$ ,00
$ ,00
Country B
$ ,00
$ ,00
$ ,00
% Change in GDP Year-on-Year
2014
2015
Country A
12,50%
6,67%
Country B
-6,67%
14,29%

6. Economic Growth 4.2: Importance of Economic Growth
To achieve higher levels economic development the in GDP needs to be higher than the in the population.
In SA: Government has earmarked a growth
rate of 5-6% in order to create jobs and
reduce the unemployment. If this rate is
achieved, 5mil jobs could be created over
10 years.

7. Economic Growth
4.3: Methods to achieve economic growth: Both Macro and Micro strategies could be employed to achieve growth
Macro Strategies: Government can use various combinations of Fiscal & Monetary policies to stimulate economic growth
Government Spending
Taxes
Interest Rates
Micro Strategies: More efficient businesses can produce output at cheaper rates, as well as faster. Output and employment is subsequently increased. Demand increases further for goods and growth occur.
4.4: Constraints on economic growth:
Lack of skills…
Lack of capital investment…
Lack of infrastructure…

8. Recent Growth Rate in SA
= Average 1% (Apartheid & Sanctions)
= Average 4% (GEAR: > High Interest and Inflation hamper growth)
= Average 5% (ASGISA -> Growth touched between 6 & 7% during this period)
In 2008 the Global Recession hit, which negatively impacted on growth globally.
SA GDP: Figure 8.7 on page 168

9. FYI: Recent economic growth stats of various countries
Country Name
2010
2011
2012
2013
2014
Ave
India
10,26
6,64
5,08
6,90
7,42
7,26
Botswana
8,56
6,05
4,83
9,32
4,42
Nigeria
7,84
4,89
4,28
5,39
6,31
5,74
Brazil
7,57
3,92
1,76
2,74
0,14
3,23
Russian Federation
4,50
4,26
3,41
1,34
0,64
2,83
Australia
1,96
2,32
3,73
2,51
2,47
2,60
Canada
3,37
2,96
1,92
2,00
2,53
2,56
South Africa
3,04
3,21
2,22
2,21
1,52
2,44
United States
1,60
2,39
Germany
4,09
3,59
0,38
0,11
1,95
United Kingdom
1,91
1,65
0,66
1,66
2,55
1,69
Finland
2,99
2,57
-1,43
-1,32
-0,11
0,54
Greece
-5,45
-8,86
-6,57
-3,90
0,77
-4,80
Source: World Bank