Economic Growth What is economic growth? Economic growth is the increase in the amount of the goods and services produced by an economy over time. It is.

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Presentation transcript:

Economic Growth What is economic growth? Economic growth is the increase in the amount of the goods and services produced by an economy over time. It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP. In other word economic growth is a positive change in the level of production of goods and services by a country over a certain period of time adjusting with current rate of inflation..changeproductiongoodsservices countryperiod

How to measure growth? Economic growth is measured as the annual percent change of gross domestic product (GDP). A better way of measuring economic growth is real GDP per capita. It is calculated by Real GDP/size of the population

What is GDP GDP stands for Gross Domestic Product. It is the total market value of all final goods and services produced in a country in a given yearGrossDomesticProductmarket valuegoodsservicescountry

Economic Growth Using measures of economic growth can give distorted pictures of the level of income in a country – the income distribution is not taken into account. A small proportion of the population can own a large amount of the wealth in a country. The level of human welfare for the majority could therefore be very limited. But this could be just around the corner! This might be a common picture……

Growth is usually calculated in real terms, i.e. inflation-adjusted terms, in order to net out the effect of inflation on the price of the goods and services produced. NominalNominal growth is defined as economic growth including inflation, while real growth is nominal growth minus inflation.growtheconomicinflationreal Economic Growth

Indicators of Economic Growth Increase in Employment opportunity. Increase in PCI. Increase in GDP. Increase in exports. Improvement in the standard of living. Increase investment on capital goods. Increase in the level of skill of workers.

How to achieve economic growth? The following factors can help to achieve economic growth: Capital accumulation Investment in capital equipment that is used by people at work is the key to economic growth. These resources will enable the workforce to produce consumer goods more efficiently. Technological Progress Improvement in technology will lead to more goods being produced from available resources. The country will have achieved a higher gross domestic product. Improvement in quality of human resources Improving the quality of existing workforce can lead to increased productivity and hence optimum utilisation of resources. The quality of human resource can be improved with education, training and healthcare. Research and development Discovering new sources of natural resources will add to the total output of the country.