ECONOMIC GROWTH
Features of Economic Growth
Definition
Economic growth refers to an increase in a country's ability to produce goods and services. The advantage of economic growth is that an increase in real national income allows more goods for consumption.
Developing Countries
A developing country or less developed country (LDC) is one which is not yet fully industrialised and tends to have the following features:
Agriculture is more important than manufacturing.
There is limited specialisation and exchange.
There are not enough savings to finance investment.
Population is expanding too rapidly for available resources.
A low standard of living.
A developed country is more fully industrialised and has a high standard of living.
Barriers to Economic Growth
A country can increase production if it increases the amount of resources used or makes better use of existing factors. Economic growth is more difficult if:
A country lacks the infastructure (underlying capital) to produce goods more efficiently. There are three types of infastructure:
basic including electricity, road and telephone networks;
social including schools, hospitals and housing;
industrial including factories and offices.
A country lacks the machines or skilled labour needed to manufacture modern goods or services.
A country lacks the technical knowledge.
Workers are not prepared to accept specialisation and the division of labour.
Population growth is too rapid.
A country has too large a foreign debt.
Disadvantages of Economic Growth
Increased noise, congestion and pollution.
Towns and cities may become overcrowded.
Extra machines can be produced only by using resources currently involved in making consumer goods.
A traditional way of life may be lost.
People may experience increased anxiety and stress.
North v. South
The Brandt Commission
The Brandt Report divided the world into rich (North) and poor (South) sectors and found that in developing countries more than 800 million are destitute and 17 million die needlessly before they are five years old. We in the North have 25 per cent of the world's population but consume 80 per cent of all the goods made.
Recommendations of the Brandt Commission
Brandt suggested that the North should help the South by transferring resources and starting a global famine relief programme. The development role of the World Bank should be strengthened. Nations should pay an income tax, and a tax should be put on the sale of military equipment.