Economic growth can be defined as the increase in the value of goods and services regulated by inflation over time.
Growth is usually calculated realistically (in adjusted inflation terms) to eliminate the distorting effect of inflation on the price of goods produced. Measuring economic growth uses national income accounting. Because economic growth is measured as a percentage of annual change in gross domestic product (GDP), it has all its advantages and disadvantages. The economic growth rate of countries is usually compared using the ratio of GDP to population (per capita income).
(Meaning economic growth rate)
“Economic growth rate” refers to the annual geometric rate of GDP growth between the first and last years over a period of time. This growth rate reflects the trend of the average level of GDP over the period and ignores any fluctuations in GDP around this trend.
Economists call intensive growth due to more efficient use of inputs (increased labor productivity, physical capital, energy or materials) intensive growth. In contrast, GDP growth is only due to an increase in the amount of inputs available for use (increase in population or new territory).
The development of new goods and services also creates economic growth. As in the United States, about 60 percent of consumer spending in 2013 was on goods and services that did not exist in 1869.
(Threshold hypothesis from Vahid Motaghi)
One theory that links economic growth to quality of life is the “threshold hypothesis,” which states that economic growth increases the quality of life to some extent. Face decline. This results in an inverted U-shaped curve, where the vertex of the curve represents the level of growth to be targeted. Happiness has been shown to increase to at least $ 15,000 per capita per capita GDP.
Economic growth, as a result of simultaneous increases in job opportunities and increased labor productivity, has the indirect potential to reduce poverty. A study by researchers at the Overseas Development Institute (ODI) on 24 countries found that in 18 cases poverty Dropped.
In some cases, quality of life factors such as health care and education outcomes, as well as social and political freedoms, do not improve with economic growth.
Increasing productivity does not always lead to higher wages, as seen in the United States, where the gap between productivity and wages has widened since the 1980s.
While acknowledging the key role economic growth can potentially play in human development, poverty reduction, and the achievement of the Millennium Development Goals, it is widely understood among the development community that special efforts need to be made to ensure that the poorer sections of society are able to They contribute to economic growth. The impact of economic growth on poverty reduction – the impetus for poverty growth – may depend on the level of inequality that exists. For example, with low inequality, a country with a growth rate of 2% per capita and 40% of its population living in poverty can reduce poverty by half in ten years, but for a country with high inequality, the same reduction can be achieved. It takes about 60 years. “While economic growth is necessary, it is not enough to make progress in reducing poverty,” said UN Secretary-General Ban Ki-moon.