<3.3.1: ECONOMIC GROWTH>

• ECONOMIC GROWTH is defined as an INCREASE IN REAL GDP that an economy produces over a period of time, the MINIMUM OF TWO CONSECUTIVE QUARTERS (6MTHS+).

• An increase in an economy’s productive potential can be shown by an OUTWARD SHIFT in the economy’s production possibility frontier (PPF).

• [QUOTIENT RULE] If X = Y/Z then %ΔX = %ΔY - %ΔZ

• [PRODUCT RULE] If X = Y * Z then %ΔX = %ΔY + %ΔZ

• This is usually the result of a TEMPORARY IMPROVEMENTS such as a fall in business taxes, or the awarding of subsidies, however, once the output goes beyond the full employment level, the shortages of productive factors such as labour mean wages will be forced upwards and the rightwards shift in SRAS will be countered with a leftward shift, resulting in output returning to its original level.

• However, if the SRAS shift comes from PERMANENT IMPROVEMENTS, such as the adoption of more efficient technology or investment in capital that lowers costs now and raises future productivity, or workforce training that boosts efficiency both short- and long-term, then both SRAS and LRAS shift right.

• If REAL GDP GROwTH > POPULATION GROWTH, then GDP per capita will RISE, which indicates that there is a GREATER POTENTIAL FOR PEOPLE to INCREASE THEIR CONSUMPTION OF GOODS AND SERVICES, and IMPROVE THEIR STANDARD OF LIVING right?

"Will the increase in incomes be equally shared?"

• This relates to how the gains in GDP are distributed. If they only end up in the pockets of a small % of the population, then economic growth has had little impact on the well-being of the average citizen.

"Will the increase in incomes be spent more by households?"

• If the metric for measuring improvements in well-being is the greater ability to consume goods and services, then we can only say economic growth has achieved this if a larger portion of the growth has been in household spending ('C').

"Will the increase in incomes be enjoyed equally amongst the sexes?"

• The improvements in income and living standards that real growth brings, do not always get shared equally amongst the sexes. In fact, there are numerous indexes that show a clear disparity in favour of males.

"Will the increase in incomes result in more spending on merit goods?"

• As output grows, so too does government revenues, as such governments have more funding for merit goods such as schools and hospitals, however, it remains to be seen what they prioritise.

• Economic growth implies a greater use of resources.

• "Let's grow now, clean up later, and once incomes rise, and the technology cost lowers then we will be for full implementation, ok lah!!!"

• This way of thinking, is focused entirely on ECONOMIC GROWTH + GREATER INCOMES IN THE PRESENT, and thus resist any changes that may reduce costs such as the use of greener energy technology, or restricted yields to allow for regeneration.  

• "Hmmm!!, you do realise that these resources are rivalrous in consumption like the fish in the sea, and the clean air in the sky, right?, Once they are gone you can't get them back, and then what?, your children's children won't have access to them at all!!, you are jeapodising future growth for present growth you are guilty of short-terminism"

"We need a sustainable growth rate which can meet present needs without compromising the ability of future generations to meet their own needs"

• Go to ChatGPT and input the prompt below. once you have your tables copy and paste them onto a canvas  template.  

• Create a table titled 'NEGATIVE CONSEQUENCES of ECONOMIC GROWTH', then for each of the following indicators, HDI RANKINGS, INCOME EQUALITY, LIFE EXPECTANCY, GENDER EQUALITY, ENVIRONMENTAL DAMAGE, and one more indicator of your choice, identify an appropriate measure/index that can be used to measure them. Then identify a country for each indicator that exhibits a RISING GDP PER CAPITA but a WORSENING value/ranking in terms of one of the indicators.  For each country, identify the level of change in REAL GDP PER CAPITA over the past decade, then the level of change in the chosen measure/index over the past decade, and finally, provide a possible explanation as to why this may have occurred.

• Create a table titled 'POSITIVE CONSEQUENCES of ECONOMIC GROWTH', then for each of the following indicators, HDI RANKINGS, INCOME EQUALITY, LIFE EXPECTANCY, GENDER EQUALITY, ENVIRONMENTAL DAMAGE, and one more indicator of your choice, identify an appropriate measure/index that can be used to measure them. Then identify a country for each indicator that exhibits a RISING GDP PER CAPITA and an IMPROVING value/ranking in terms of one of the indicators.  For each country, identify the level of change in REAL GDP PER CAPITA over the past decade, then the level of change in the chosen measure/index over the past decade, and finally, provide a possible explanation as to why this may have occured.

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